Rubino v Pineview Property Holdings Pty Ltd - [2016] NSWSC 904

Supreme Court

New South Wales

Medium Neutral Citation: Rubino & Anor v Pineview Property Holdings Pty Ltd & Ors [2016] NSWSC 904
Hearing dates: 11-14; 18-22; 26 April 2016; 17 and 18 May 2016; 16 and 17 June 2016
Decision date: 30 June 2016
Jurisdiction: Equity
Before: White J
Decision:
Refer to para [376] of judgment.

Catchwords:
REAL PROPERTY — Loss of interest in land — Claim for compensation out of Torrens Assurance Fund — Real Property Act s 129 — Plaintiffs transferred ownership of real property to second defendant — Second defendant mortgaged properties to secure loan — Proceeds of loan disbursed largely to the benefit of third, fourth and fifth cross-defendants to third cross-claim — Plaintiffs claim to have been deceived into signing transfer documents — Whether plaintiffs deprived of their interest in land by fraud — Plaintiffs intended second defendant to raise finance by becoming the registered proprietor of the properties and borrowing moneys on security of them — Signatures on transfer documents not procured by fraud — Claim against second defendant dismissed — Claim against Registrar General dismissed

TORTS — Negligence — Whether fourth defendant breached duty of care by failing to take reasonable care to ensure certificate of title used only as instructed — Solicitor not retained to advise on wisdom of proposed transaction — Certificate of title used only as instructed by plaintiffs — Whether fourth defendant had duty to disclose known facts concerning third cross-defendant to third cross-claim’s discredit — Plaintiffs had prior experience of third cross-defendant to third cross-claim’s business practices — No duty of care — No breach of duty in any event
EQUITY — Breach of fiduciary duty — Deceit — Whether third, fourth and fifth cross-defendants to third cross-claim owed a fiduciary duty to cross-claimants to third cross-claim — Whether third cross-defendant to third cross-claim deceived first cross-claimant to third cross-claim — Whether excess borrowed moneys disbursed without authority — Excess of moneys borrowed to purchase plaintiff’s property intended to be used to discharge debts of plaintiffs and first cross-claimant to third cross-claim — Excess moneys disbursed by third cross-defendant to their own benefit without knowledge or authority of cross-claimants — Third, fourth and fifth cross-defendants to third cross-claim breached fiduciary duty owed to cross-claimants to third cross-claim — Third cross-defendants to third cross-claim deceived first cross-claimant to third cross-claim — Judgment in favour of cross-claimants to third cross-claim
Legislation Cited: Civil Liability Act 2002 (NSW)
Civil Procedure Act 2005 (NSW)
Consumer and Competition Act 2010 (Cth)
Environmental Planning and Assessment Act 1979 (NSW)
National Consumer Credit Protection Act 2009 (Cth)
Real Property Act 1900 (NSW)
Cases Cited: Abigroup Pty Ltd v Abignano (1992) 39 FCR 74
Australia and New Zealand Banking Group Ltd v Huybers [2014] NSWSC 720
Australian Hardboards Ltd v Hudson Investment Group Ltd [2007] NSWCA 104; (2007) 70 NSWLR 201
Breen v Williams [1996] HCA 57; (1996) 186 CLR 71
Cassegrain, Felicity v Cassegrain, Denis [2016] NSWCA 71
Hardoon v Belilos [1901] AC 118
Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41
Re Application of Sutherland and Arnautovic [2014] NSWSC 821
Rubino v Australia and New Zealand Banking Group Ltd [2014] NSWCA 362
Category: Principal judgment
Parties: Lee Rubino as executor of the estate of the late Alfio Rubino (1st Plaintiff/1st Cross-Defendant on 3rd Cross-Claim)
Biagina Rubino (2nd Plaintiff/2nd Cross-Defendant on 3rd Cross-Claim)
Francesco Rubino (4th Cross-Defendant on 2nd Cross-Claim)
Pineview Property Holdings Pty Ltd (2nd Defendant/2nd Cross-Claimant on 3rd Cross-Claim)
Registrar General of NSW (3rd Defendant)
Salvatore Russo (4th Defendant/Cross-Claimant on 2nd Cross-Claim)
Susan Huybers (1st Cross-Claimant on 3rd Cross-Claim)
George Dimitriou (1st Cross-Defendant on 2nd Cross-Claim/3rd Cross-Defendant on 3rd Cross-Claim)
Wyse & Young International Pty Ltd (2nd Cross-Defendant on 2nd Cross-Claim/4th Cross-Defendant on 3rd Cross-Claim)
Wyse Accounting Pty Ltd (3rd Cross-Defendant on 2nd Cross-Claim/5th Cross-Defendant on 3rd Cross-Claim)
Andrew Jetson (5th Cross-Defendant on 2nd Cross-Claim)
Representation:
Counsel:
M W Young SC (Plaintiffs and 1st & 2nd Cross-Defendants to 3rd Cross-Claim and 4th Cross-Defendant to 2nd Cross-Claim)
J Donohoe (2nd Defendant and 1st Cross-Claimant on 3rd Cross-Claim) (11-26 April 2016)
M Auld (2nd Defendant and 1st Cross-Claimant on 3rd Cross-Claim) (17 May – 16 & 17 June 2016)
C Webster SC with J Shepard (3rd Defendant)
D A Allen (4th Defendant/Cross-Claimant on 2nd Cross-Claim)
M Foley, Solicitor (1st-3rd Cross-Defendants on 2nd Cross-Claim and 3rd-5th Cross-Defendants on 3rd Cross-Claim)
Solicitors:
Bransgroves Lawyers (Plaintiffs and 1st & 2nd Cross-Defendants to 3rd Cross-Claim and 4th Cross-Defendant to 2nd Cross-Claim)
Gardner Ekes (2nd Defendant and 1st Cross-Claimant on 3rd Cross-Claim)
Land & Property Information (3rd Defendant)
Russo Partners (4th Defendant/Cross-Claimant on 2nd Cross-Claim)
Foleys Lawyers (1st-3rd Cross-Defendants on 2nd Cross-Claim and 3rd-5th Cross-Defendants on 3rd Cross-Claim)

File Number(s): 2013/301976

Judgment

Introduction

HIS HONOUR: The plaintiffs in these proceedings are Mrs Biagina Rubino and Ms Lee Rubino as executrix of the estate of the late Alfio Rubino. Alfio Rubino died on 21 October 2013 after these proceedings had commenced. His executrix, Lee Rubino, is the wife of his oldest son, Francesco (also known as Frank) Rubino.
Alfio and Biagina Rubino (“Mr and Mrs Rubino”) were formerly the registered proprietors of two adjoining properties in Galston. One was in Calderwood Road and the other was in Pine Valley Road. In these reasons those properties are called the “Calderwood property” and the “Pine Valley property” or together the “Galston properties”. The plaintiffs claim that Alfio and Biagino Rubino were deprived of those properties by fraud. They joined four defendants. The first defendant was Australia and New Zealand Banking Group Ltd (“the ANZ Bank”). The second defendant is Pineview Property Holdings Pty Ltd (“Pineview”). The third defendant is the Registrar General. The fourth defendant is Mr Salvatore Russo. He had been retained by the Rubinos as their solicitor. The plaintiffs claim that it was by his negligence that the frauds were able to be committed.
The plaintiffs’ claim against the ANZ Bank was settled on 25 November 2015. The ANZ Bank took no part in the hearing.
By December 2011 the ANZ Bank claimed that Alfio and Biagina Rubino owed it more than $6.25 million. It claimed that the loans were secured over the Calderwood property, the Pine Valley property, and a third property owned by Mr and Mrs Rubino in Arcadia Road, Arcadia (“the Arcadia property”). Frank and Lee Rubino lived on the Arcadia property and had built a house on it. Mr and Mrs Rubino lived on the Calderwood property. Following a mediation, the ANZ Bank and Mr and Mrs Rubino entered into an agreement for the settlement of their dispute. The agreement was signed by the Rubinos on 20 December 2011. The Rubinos agreed that by 16 January 2012 they would deliver up vacant possession of the Arcadia property or else pay $1,650,000 to redeem and obtain a discharge of the mortgage over that property. They agreed that by 16 January 2012 they would either deliver up vacant possession of the Pine Valley property or pay $1,050,000 to redeem and obtain a discharge of the mortgage over that property. The Rubinos agreed that by 12 January 2012 they would provide the bank with full access to the Arcadia and Pine Valley properties to allow an inspection so that the bank could confirm that each of the properties was in a fit and proper state to enable vacant possession to be delivered up on 16 January 2012. The parties agreed that if the Rubinos performed their obligations the bank would discharge the mortgage over the Calderwood property. In essence, the effect of the agreement was that Mr and Mrs Rubino were able to keep their Calderwood property. They could also keep the Pine Valley property if they were able to raise $1,050,000 by 16 January 2012 to redeem the mortgage over that property. They could also keep the Arcadia property if they were able to raise $1,650,000 to redeem the mortgage over that property by 16 January 2012.
The plaintiffs, through their son Frank Rubino, engaged the services of Mr George Dimitriou to attempt to raise moneys to discharge the ANZ Bank’s mortgages over the Pine Valley and Arcadia properties. Dimitriou operated principally through a company called Wyse & Young International Pty Ltd (“Wyse & Young”). Dimitriou organised two short-term loans to be provided to the Rubinos totalling $1,050,000 that enabled the ANZ Bank’s mortgage over the Pine Valley property to be discharged. As security for these loans Wyse & Young took custody of the certificates of title to both the Calderwood and Pine Valley properties. The Rubinos claim that Russo was retained as their solicitor to obtain custody of at least the certificate of title to the Calderwood property and that he was negligent in providing it to Wyse & Young.
Pineview was incorporated on 9 January 2012 on the instructions of Mr Andrew Jetson who acted on behalf of Wyse & Young. On 8 March 2012 Mr and Mrs Rubino signed a transfer of both the Calderwood and Pine Valley properties in favour of Pineview for an expressed consideration of $2,500,900. Their signatures on the transfer were witnessed by Frank Rubino. That consideration was not paid to Mr and Mrs Rubino. They say they were tricked into executing the transfers by Jetson’s representing to them that the document they were asked to sign was to help them get finance for the Pine Valley property.
Frank Rubino says that Dimitriou was engaged to obtain what he called a “conforming bank loan” to refinance the short-term loans of $1,050,000 provided by two of Dimitriou’s clients. They were a Mr Danny Kalischer and a Ms Susan Huybers. Kalischer provided $480,000. Huybers provided $570,000.
Working with a lending manager of the ANZ Bank, Mr David Winiata, Dimitriou arranged for Pineview to borrow $2,000,720 from the ANZ Bank on security of first registered mortgages over the Calderwood and Pine Valley properties. The loan was settled on 9 March 2012 and in due course Pineview became the registered proprietor and the bank became registered as mortgagee.
Wyse & Young arranged for Huybers to be the sole shareholder and director of Pineview. She and another company of which she was shareholder and director, Green Global Constructions Pty Ltd (“Green Global”), guaranteed Pineview’s obligations to the ANZ Bank.
The Rubinos say that this was done without their knowledge. They say that Dimitriou acted as a de facto director of Pineview, or in any event as Pineview’s agent, and that he and Winiata caused them to be deprived of their estate as registered proprietors of the Calderwood and Pine Valley properties by fraud. The fraud lay in their being induced to sign a transfer of the properties in favour of Pineview without their appreciating that that was the effect of the document they signed. They also say that they were deprived of their interest by Pineview’s then mortgaging the properties to the bank to secure loans totalling $2,000,720. What they say they were expecting was that Dimitriou would arrange a bank loan sufficient to repay $1,050,000 to the provider of the short-term funds together with whatever interest or other reward was properly payable to those lenders. According to Frank Rubino, it was not until February 2013 that he learned that the Calderwood and Pine Valley properties had been transferred to Pineview and that the ANZ Bank had mortgages over them for over $2 million (Frank Rubino [323]).
For the reasons which follow I reject that claim. At all times Mr and Mrs Rubino relied on Frank Rubino to act for them in attempting to save the Pine Valley and the Arcadia properties. I have concluded that, contrary to his denials, Frank Rubino was aware that finance was to be raised by Pineview’s becoming the registered proprietor of the properties and borrowing moneys on security of them. The properties were to be held by Pineview on trust for Mr and Mrs Rubino, or possibly their grandchildren, and the loan was to be serviced by the Rubinos. This arrangement was entered into because it was thought that Mr and Mrs Rubino could not themselves borrow the funds to discharge the ANZ Bank’s mortgage over Pine Valley, nor to discharge its mortgage over Arcadia. Mr and Mrs Rubino were in their 80s. They were pensioners. Other trading companies of the Rubinos had been placed in liquidation. Their three sons were either bankrupt or about to become so.
After deduction of stamp duty, other government charges and bank fees, $1,990,551 was received from the ANZ Bank on 9 March 2012. $123,059.50 was paid to Wyse & Young. That money was used to pay the stamp duty on the transfer of the properties. After deducting a special clearance fee, $1,867,446.50 was paid to Wyse Accounting Pty Ltd (“Wyse Accounting”). Of this sum $1,296,043.96 was paid to Dimitriou or companies associated with him, or retained by Wyse Accounting. Kalischer was paid $490,010 being repayment of his advance of $480,000 plus approximately $10,000 in interest for the loan. Huybers’ advance of $570,000 was not repaid to her. Dimitriou says that with her authority he reinvested about $495,000 of her money by making a loan through another company he controls, Defined Properties Pty Ltd, to other borrowers. He claims that other repayments have been made to Huybers that means that she has been more than fully repaid her advances. She disputes this. Other moneys were kept as fees said to have been owed to Wyse & Young for services provided to members of the Rubino family or companies associated with them that went into liquidation and as fees for arranging the $1,050,000 loan to the Rubinos on 17 January 2012 and for arranging the $2,000,720 loan by Pineview from the ANZ Bank. Dimitriou says that Frank Rubino authorised these payments or retentions and also authorised payment of $64,000 to Kalischer in respect of an earlier short-term loan arrangement and authorised payment of $108,000 to Russo for outstanding fees claimed to be owed by the Rubino family to Russo. Dimitriou says that those moneys were not paid to Kalischer or Russo because they each owed him more than those sums.
Frank Rubino denies giving any such authority. He says he was wholly unaware of the transaction by which his parents’ properties were transferred to Pineview and moneys were borrowed by Pineview on security of those properties. Consistently with that, he denies authorising any payments from the moneys borrowed by Pineview from the ANZ Bank.
Pineview, through Huybers, admits that it holds the Calderwood and Pine Valley properties on trust for Mr and Mrs Rubino. However, Pineview says that this is subject to the Rubinos paying moneys owing to the ANZ Bank. Pineview and Huybers claim that they were defrauded by Dimitriou.
The ANZ Bank has obtained judgment against Pineview, and against Green Global and Huybers who guaranteed the loan. Pineview and Huybers also say that Dimitriou was acting as agent for Mr and Mrs Rubino and they are responsible for the losses suffered by Huybers and Pineview arising from Dimitriou’s conduct.
The plaintiffs did not join Dimitriou or any of his companies as defendants. The reason for this can only be a matter of speculation. The plaintiffs claim compensation from the Torrens assurance fund pursuant to s 129 of the Real Property Act 1900 (NSW) on the ground that they were deprived of their interest in the lands by fraud. The fraud relied upon by the plaintiffs in their case against both Pineview and the Registrar General was that Mr and Mrs Rubino did not know or understood that they had signed a transfer of the two properties and that signatures on the transfer were fraudulently procured by Wyse & Young, through Jetson, that was acting on behalf of Pineview, or through Dimitriou, who was the agent and de facto director of Pineview. The plaintiffs’ case is that Mr and Mrs Rubino were tricked into signing the transfers. They submit that the fraud was not confined to the signing of the transfers, but extended to Pineview’s applying to the ANZ Bank for loans secured over the properties ostensibly for the purpose of purchasing them. They say the loans were obtained with the collusive assistance of Winiata and through the use of forged documents purporting to be contracts for sale of the properties executed by Mr and Mrs Rubino.
The plaintiffs’ case is not that the fraud consisted of Dimitriou’s arranging for Pineview to borrow more money from the ANZ Bank than was required to repay the two short-term loans totalling $1,050,000 and fees or interest in respect of those loans. That is, the plaintiffs’ case is not that they or Frank Rubino knew that the lands were to be transferred to Pineview which would borrow money from the ANZ Bank, and they were defrauded by Pineview’s borrowing more money than was authorised, or by Dimitriou’s applying the funds borrowed in payment of fees allegedly due to him or his companies. As Dimitriou submits, the plaintiffs in their statement of claim make no complaint against him in respect of the disbursement of the moneys borrowed.
Huybers says that she was unaware that settlement of the loan had occurred on 9 March 2012. She says she did not authorise the loan proceeds being paid to Wyse Accounting or to Wyse & Young.
The effect of what was done was that using the personal covenant of Pineview, and personal guarantees of Huybers and Green Global, and using the lands of the Rubinos, Dimitriou obtained for himself almost $1.3 million.
Dimitriou’s conduct was unconscionable and fraudulent. The principal victim was Huybers, not the Rubinos. The Rubinos were not deprived of their land by fraud. They may have been defrauded to the extent the land was encumbered beyond what Frank Rubino on behalf of his parents had agreed to. But that was not the case the plaintiffs advanced.
Pineview and Huybers are entitled to damages or equitable compensation against Dimitriou, Wyse & Young International and Wyse Accounting. Other companies under the control of Dimitriou to which substantial moneys were paid were not joined as defendants. It may be open to Pineview and Huybers to bring proceedings against other Dimitriou companies, but that is not a question that presently arises.

Proceedings brought by ANZ

No clear evidence was given as to what payments were made to the ANZ Bank or when the loan first fell into default. On 8 April 2013 the bank commenced proceedings against Huybers, Green Global and Pineview. It alleged that as at 6 February 2013 Pineview had failed to pay instalments under the two loans which, as at 6 February 2013, totalled approximately $58,000. It sought judgment for possession and judgment against Pineview for $2,083,046.96, and judgment against Huybers for $2,002,473.90. Judgment was entered in default of defence on 18 June 2013 and writs of possession were issued in respect of each of the Calderwood and Pine Valley properties on 9 July 2013. (Australia and New Zealand Banking Group Ltd v Huybers [2014] NSWSC 720 at [1], [5]).
On 3 September 2013 Mr and Mrs Rubino applied to be joined to the proceedings in the Common Law Division and applied for a stay of execution of the writs of possession. The current proceedings in the Equity Division were filed on 8 October 2013. The Rubinos’ application was initially unsuccessful (Australia and New Zealand Banking Group Ltd v Huybers & Anor [2014] NSWSC 720). But on 24 October 2014 the Court of Appeal determined that there should be a stay of execution of the writs for possession, on terms, pending the final disposition of the Equity proceedings (Rubino v Australia and New Zealand Banking Group Ltd [2014] NSWCA 362 at [70]-[72]).

On 14 October 2015 the ANZ Bank filed a cross-claim against Dimitriou, Wyse & Young and Wyse Accounting. For the purposes of the cross-claim it repeated allegations made by the plaintiffs in their statement of claim and alleged that by reason of those matters Dimitriou, Wyse & Young and Wyse Accounting would, if sued, have been liable as a tortfeasor for the tort of deceit. At that stage no other party had joined Dimitriou, Wyse & Young or Wyse Accounting as cross-defendants.

Settlement by the Rubinos with the ANZ Bank

On 25 November 2015 a deed of settlement was made between the ANZ Bank, Biagina Rubino, Lee Rubino and Frank Rubino. The bank agreed to discharge its mortgages over the Calderwood and Pine Valley properties if Lee and Biagina Rubino paid it $1,315,000 by (in the events which have happened) 30 June 2016. The bank agreed that if Biagina and Lee Rubino paid it $15,000 per month commencing on 30 June 2016 on the 30th day of each calendar month thereafter, it would refrain from enforcing the writs of possession until 31 October 2016. The Rubinos agreed that if $1,315,000 and any additional amounts of $15,000 per month were not paid by 31 October 2016 the ANZ Bank would then be at liberty to enforce the writs of possession. The Rubinos, including Frank Rubino, released the ANZ Bank from all claims and the parties agreed to consent to orders that the proceedings against the ANZ Bank be dismissed with no order as to costs.
That order was made on 3 December 2015. On 16 December 2015 by consent of the ANZ Bank and the cross-defendants to its cross-claim, that is Dimitriou, Wyse & Young and Wyse Accounting, I ordered that the bank’s cross-claim of 4 October 2015 be dismissed with no order as to costs. However, Dimitriou, Wyse & Young and Wyse Accounting were later joined as cross-defendants to cross-claims brought by Russo and by Pineview and Huybers.

Initial dealings between the Rubinos and Dimitriou

Frank Rubino deposed that he was introduced to Dimitrou by Russo in February 2010 (CB 1/244). From the end of November 2008 Rubino Holdings Pty Ltd (“Rubino Holdings”) was in default in respect of a loan from the ANZ Bank. It seems that various loans were cross-collateralised. Frank Rubino says that he told Dimitriou that the family had several loans with the bank totalling $5 million and the bank had security over his parents’ property as well as over property of Rubino Holdings. Rubino Holdings owned an 80-acre property at Cooranbong, and also a warehouse at Homebush. Either Mr and Mrs Rubino or Rubino Holdings owned another property at Calabash Road, Arcadia (this is in addition to the Arcadia Road property referred to at para [4] above). Russo was the solicitor for the Rubino family. The Rubinos also owned or had a leasehold interest in various florist shops in shopping centres and had franchise arrangements with other florists. A florist’s business was conducted through a company called Inbloom Florist Pty Ltd (“Inbloom Florist”). Frank Rubino and his brothers Antonio and Mauro, were directors of that company (CB 5/1954-5). Russo gave evidence that to his recollection the debts owed to the ANZ Bank exceeded $7 million (T608). Dimitriou was engaged to negotiate with the ANZ Bank to endeavour to negotiate releases of the bank’s securities on favourable terms to the Rubinos. Frank Rubino said that he attended meetings with Russo and Dimitriou and an accountant, Mr Arcuri, at offices of a firm of accountants called Chan Naylor. He said that he received advice about restructuring the Rubino businesses and planning for the financial future. New companies were incorporated. One of these was Natlee Holdings Pty Ltd (“Natlee”). It was incorporated on 19 July 2010. According to the company search its directors from 19 July 2010 were Lee Rubino and Amanda Rubino (a granddaughter of Alfio and Biagina). Alfio Rubino became a director on 27 July 2010. Another company incorporated at that time was Lukazara Pty Ltd (“Lukazara”). It was incorporated on 21 June 2010. Lee Rubino was the sole shareholder and director of that company.
Frank Rubino deposed that between May and August 2010 he called Dimitriou almost daily and visited him regularly checking where he was at with refinancing the ANZ loans. He said that between August and October 2010 he called Dimitriou almost daily and visited his office weekly checking where he was at with the refinancing.
Frank Rubino deposed that in late August 2010 Dimitriou advised him that the ANZ Bank had agreed to accept $1.85 million to discharge its mortgage over the Arcadia property. By that time Frank Rubino was dealing with a cousin, Mr Steve Gatto, who was involved in the finance business, who was to arrange a loan with a private lender. That loan did not proceed. The ANZ Bank’s loan was not discharged. Frank Rubino deposed that in about October 2010 there was a Farm Debt Mediation in relation to the ANZ Bank’s mortgage over the Cooranbong property. Dimitriou introduced a solicitor, Mr Michael Foley, to Frank Rubino. He acted for the Rubinos in relation to that Farm Debt Mediation concerning the Cooranbong property. Frank Rubino deposed that the bank agreed to allow “us” to manage the sale of the Cooranbong property which went to auction in April 2011 and sold for $1 million.

Sale of the Cooranbong property

The Cooranbong property was sold to a neighbour of the Rubinos, a Mr Peter Lane. Frank Rubino said that the bank had valued the Arcadia property at $1.3 million. He said that “we let our neighbour know that we were putting it on the market. It was being auctioned and if he was able to help us to bid for that property, yes.” He said in substance that having Lane purchasing the property would help the family because Lane could sell it back to the family. He said that Dimitriou was involved in the transaction. (T269). He said the property was sold for $1,010,000 (T270). He said that Russo was organising an agreement, that never eventuated, that Lane would sell the property back to the Rubino family. Russo confirmed that there was a meeting with Lane where there was discussion about his buying the property and giving an option to the Rubinos to buy it back (T609). It does not appear that this arrangement was ever documented. Russo said that Lane said words to the effect:

“I will hold the property in trust, but the Rubinos have got to make the payments. If they don’t make the payments, I’m going to take the property and the machinery”. (T609.45)

Although there was no documentation to explain this transaction, it does seem that the ANZ Bank allowed Rubino Holdings, which owned the Cooranbong property, to sell the property and agreed to accept $1 million in discharge of its mortgage. It also appears that there was an undocumented informal arrangement with the purchaser, a neighbour, to hold the property for the Rubinos and transfer the property back to them if the Rubinos paid Lane what he had to pay to buy the property and serviced his mortgage debt.
This transaction has a dual significance. It is the same kind of transaction as all the parties, other than the plaintiffs, say took place in relation to the Calderwood and Pine Valley properties in March 2012. Its other significance is that Dimitriou claims that he was owed substantial fees for his role in the transaction.
On or about 28 April 2011 Dimitriou lodged a caveat on the title to the Cooranbong property claiming an interest as equitable mortgagee pursuant to a deed and unregistered mortgage given by Rubino Holdings dated 10 November 2010. The caveat bears the consent of Antony Rubino for the registered proprietor and is also signed by Frank Rubino as a witness. Dimitriou produced an unsigned mortgage dated 10 November 2010 in favour of him expressed to be between him and Rubino Holdings under which Rubino Holdings acknowledged receipt of a principal sum of $198,944 and agreed to pay that sum by 10 January 2011 and agreed also to pay an establishment fee of $7,850. There was no evidence of any such advance by Dimitriou to Rubino Holdings. I understand Dimitriou’s case to be that this was an acknowledgment by Rubino Holdings of a debt due to him for his work done for that company. That is not what the document provides for. I do not accept that Rubino Holdings was indebted to Dimitriou for that sum for the work done by Dimitriou in relation to this transaction. But this is part of the background under which Dimitriou claimed that he was entitled to be paid fees by Rubino Holdings.
The caveat must have been withdrawn in order to allow the sale of the Cooranbong property to Lane to proceed.
Receivers were appointed to Rubino Holdings on 5 August 2011 and a liquidator was appointed on 12 August 2011. Dimitriou complains that as a result of actions taken by the Rubinos through their later adviser, an accountant, Mr Prestia, companies associated with the Rubino family were put into receivership or liquidation and Frank Rubino became bankrupt and this had the effect that he was unable to pursue his claim for outstanding fees for work done for members of the Rubino family.

2010 Dealings with Arcadia

Dimitriou was also involved in the production of documents in about November 2010 in relation to the Arcadia property. The authenticity of purportedly executed but unregistered transfers and a mortgage is disputed. An undated transfer was prepared in relation to the Arcadia property that purports to be a transfer from Mr and Mrs Rubino to Frank Rubino witnessed by Russo and Gabrielle Klopf. It is likely that this document was executed. In about November 2010 such a transfer was proposed and it was proposed that Frank Rubino then transfer the Arcadia property to Lee Rubino as part of a family law settlement. Consent orders were made in the Hornsby Local Court on 4 November 2010 that provided for Frank Rubino to transfer to Lee Rubino his right, title and interest in the Arcadia property and discharge the existing mortgage over the home (Exhibit WYX1). What Mr and Mrs Rubino understood about such a transaction can only be surmised. The transaction never proceeded. They remained the registered proprietor of the property and it remained mortgaged to the ANZ Bank until the bank sold it in exercise of its power of sale on 10 March 2012.
However, on 10 November 2010 a mortgage was purportedly given by Lee Rubino over the Arcadia property in favour of Dimitriou to secure a purported advance of $148,944. No such advance was ever made by Dimitriou. Lee Rubino denied ever signing the mortgage and I accept that denial. Her purported signature in favour of Dimitriou was purportedly witnessed by Alfio Rubino. I consider that neither Alfio Rubino’s signature as a witness, nor the purported signature of Lee Rubino as mortgagor was genuine. What purports to be the signature of Lee Rubino bears a similarity to signatures on cheques purportedly signed by her that Frank Rubino admits are his signatures. The signature of Alfio Rubino as a purported witness to the purported signature of Lee Rubino is part of a group of documents that the handwriting expert, Ms Novotny, grouped as “group 2” signatures which were not genuine signatures of Alfio Rubino. Whether Frank Rubino made those signatures by which Lee Rubino purportedly acknowledge a debt of $148,944 to Dimitriou and purportedly secured that debt over the Arcadia property is an unresolved question.
Frank Rubino denied forging any signatures and there was no handwriting evidence that the signatures in question were made by Frank Rubino.
Nonetheless, I am satisfied that in November 2010 Dimitriou required an acknowledgment from the Rubino family of a debt of $148,944. I accept that the purported signature of Lee Rubino acknowledging that debt was a forgery and that she did not sign the mortgage. I do not accept that Dimitriou was owed $148,944 by Lee Rubino and I think it unlikely that he was owed that sum by anyone. He did not advance any such sum to Lee Rubino. But he was claiming this amount as a debt due from some member or members of the Rubino family. On Frank Rubino’s admission he had been in daily contact with Dimitriou in relation to the refinancing of the ANZ Bank’s loans. Dimitriou has not established that he was entitled to $148,944. As no amount is claimed under the mortgage it is not necessary to decide who forged her signature.

Dimitriou’s retainer agreement with the Rubinos

Dimitriou deposed that the Rubinos entered into a retainer agreement with Wyse & Young in January 2011. He annexed a draft of the retainer agreement that he said the Rubinos entered into and deposed that he did not have a complete signed original of that document and believed that the NSW Police had it in their possession. The unsigned document he produced was addressed to Frank, Alfio and Biagina Rubino and to Natlee Holdings, Lukazara, Rubino Holdings and Cooranbong Flowers and is dated 17 January 2011. A subpoena was issued to the NSW Police. Documents were produced. I assume that no signed retainer was produced. I am not satisfied that the retainer agreement produced by Mr Dimitrou was signed by the Rubinos. However, the document provided that it was an offer for the conduct of work which could be accepted, amongst other ways, by “providing us with further instructions in this matter” (CB 3/810). It is not clear what the “matter” might have been. The retainer letter is in substantially the same terms as a letter later provided to Huybers that Dimitriou said was a standard form precedent. It provided that Wyse & Young was engaged to do various kinds of work, including preparation of tax returns and various accounting work, and also the preparation, assessment and lodgment of applications for finance and negotiating for the discharge of current mortgages, charges or other securities “to make way for Finance to a new incoming Mortgagee”. The letter provided that “in doing this we agree to pay a fee payable no less than 20% plus GST of the amount negotiated off the current balance of debt payable and the negotiated amount paid (‘the saved debt’)”. (CB 3/806) The letter provided that the Rubinos agreed to pay a fee of three per cent for Wyse & Young’s obtaining an “… unconditional loan approval and discharge of any current liability the subject of the loan application” (CB 3/806).
The retainer agreement did not entitle Wyse & Young to a fee of “no less than 20% plus GST” for an amount saved in respect of the ANZ Bank’s debt over Cooranbong. Wyse & Young claims to have been entitled to a fee for, it says, persuading the ANZ Bank to accept $1,100,000 when it exercised its power of sale over the Cooranbong property. But that was not a saving that entitled it to a fee under its retainer agreement as the bank did not discharge its mortgage to make way for finance to a new incoming mortgagee. Instead, it exercised its power of sale as mortgagee by selling to the highest bidder at auction.
Nor was there evidence that in 2011 Wyse & Young obtained an unconditional loan approval for any members of the Rubino family. Mr Foley for the Wyse & Young parties put to Lee Rubino that she received an offer of finance from Bankwest and went to the offices of Bankwest with Dimitriou and Jetson, was given documents to sign, but suddenly refused to sign them. She denied that that happened (T69) and there was no evidence it did.
The retainer letter, an unsigned draft of which was produced by Dimitriou, also provided that any other services that might be requested of Wyse & Young would be charged at standard hourly rates being $350 per hour for a director (viz. Dimitriou) and lower rates for a tax agent, manager, senior accountant or junior accountant.
Dimitriou is not an accountant, nor a licensed financial adviser, nor a tax agent. It does not appear that Wyse & Young has an Australian credit licence. Dimitriou completed schooling only to Year 10 and has no formal qualifications. He says that he engages qualified tax agents to prepare tax returns. It was not suggested that he or Wyse & Young required a financial services licence, nor an Australian credit licence under the National Consumer Credit Protection Act 2009 (Cth).
Be that as it may, it suffices to say that in 2011 Dimitriou claimed to be entitled to hundreds of thousands of dollars of fees for work done for the Rubinos. He did not receive any payment for the work he did. It does not appear that he was entitled to any payment, except an hourly rate, which he did not invoice.
By May 2011 the ANZ Bank had commenced proceedings for possession. Frank Rubino deposed that in about late May 2011 he was frustrated with unfulfilled promises made by Dimitriou to be able to refinance the properties. Not long after late May 2011 he stopped using Dimitriou’s services and saw a Joe Prestia from Crest Capital to attempt to raise finance to discharge the ANZ Bank’s mortgage. Prestia introduced Frank Rubino to Mr Richard Watson of Watson & Watson solicitors. A further Farm Debt Mediation was scheduled and took place over three days on 14 and 29 November, and 14 December 2011. Evidently some of the main terms were settled prior to 14 December 2011. On 29 November Lee Rubino told Frank that the bank had agreed that the Calderwood property would be released to his parents free of any mortgage and the bank would release the Pine Valley property for $1,050,000 and the Arcadia property for $1,650,000. (CB 1/263 para [149]).

Lee Rubino - application for finance through Lukazara

In December 2011 Lee Rubino proposed to Alfio and Biagina Rubino that she, through her company Lukazara, could raise the funds sufficient to pay off the $1,050,000 loan. She proposed that the Pine Valley and Calderwood properties be transferred to Lukazara, but that it would hold them on behalf of Mr and Mrs Rubino. With the properties in the name of Lukazara, with her wages, with the income available to the Rubinos through Natlee Holdings (that carried on the family flower business), and with potential rental income from houses on the Calderwood and Pine Valley properties, she thought that the funds necessary to pay off the mortgage could be raised.
On 12 December 2011 Eclipse Prudent Mortgage Corporation Limited (“Eclipse”) wrote to Lukazara providing conditional approval for a mortgage advance of $1,100,000. The advance was to be secured by a registered first mortgage to be provided by Lukazara over the Calderwood and Pine Valley properties (CB 4/1353 at 1355).
In her principal affidavit sworn on 9 April 2015 Lee Rubino deposed that during the mediation process she and Frank agreed to give up their home at Arcadia so that Alfio and Biagina could keep their home at Calderwood and would be able to keep the Pine Valley property if they paid $1,050,000 to the ANZ Bank. Frank and Lee had built a house on Alfio and Biagina’s land at Arcadia and had an agreement with Alfio and Biagina in relation to that property. She deposed that during December 2011 she was making applications for finance for the $1,050,000 for the Pine Valley property which she did not proceed with.
After orders were made for the plaintiffs to give discovery of documents relating to the applications for finance, which resulted in the production to the defendants of the mortgage approval from Eclipse, Lee Rubino swore a further affidavit in which she deposed that in about December 2011 she, Frank, Alfio and Biagina had a conversation to the following effect:

“Me:    Look, the problem is that Frank, Anthony and Mauro are bankrupt so there is no way they can apply for a loan.
I do not think that Natlee Holdings Pty Ltd would get approved on its own as it is a new company without trading history.
Frank:         She’s right, we can’t.
Me:   I am happy to borrow the money for you. I have a clean credit rating and I can get loan approval easily.
Alfio/Biagina:      We don’t understand?
Me:   Well, I do not think, due to your age, any bank will lend to you money. I have a company called Lukazara Pty Ltd. I could hold the Calderwood and Pine Valley properties on your behalf, and the bank will assess my ability to service the loan. So, we could lease out the three houses on the properties and use the rental income from the leases. This income, along with Natlee Holdings’s [sic] income and my wage if necessary, enable us to make the repayments, but you need my clean credit rating so we can get approval.

This will enable you to have the required money to pay the ANZ Bank on settlement of the Heads of Agreement. This way, you will be able to keep both the Pine Valley Property and you are aware the Calderwood property will be returned to you unencumbered from the ANZ bank upon settlement of the Heads of Agreement. I know the properties mean a lot to you as initially they use[d] to be one big 10 acre lot.
You don’t need to worry about anything. You know the ANZ Bank is giving you back your family home property (Calderwood) unencumbered, so you will not lose the Pine Valley property, as we only need to find $1,050,000. You will not lose your properties, I will not let you lose your properties. Do you trust me?
Alfio/Biagina: Yes we trust you.
Me: Okay. I am going to make a loan application to find ascertain if I can borrow $1,050,000 so we have the money for the Pine Valley property at the end of the settlement of the ANZ mediation.”

Lee Rubino deposed that it was agreed that she would hold both properties on trust for Alfio and Biagina and that her credentials were to be used only for the purpose of facilitating the loan. She estimated that with the rental income the Rubinos could receive from renting three houses on the Pine Valley and Calderwood properties, and with her income and income from the Natlee Holdings’ family flower business, there would be sufficient income to service the loan.
Lee Rubino did not proceed with that proposal because she and Frank separated in early January 2012. She told Frank that she wanted nothing more to do with it and he would have to arrange the refinance for his parents. After she and Frank separated she did not proceed with the loan.
Biagina Rubino also made an affidavit on 4 March 2016. She deposed that Lee Rubino said that if she (Lee) were to borrow the money she would have to put both the Calderwood and Pine Valley properties into her name and use them as security and would hold the properties for Alfio and Biagina (CB 1/225). Biagina deposed that she was not happy about putting the Galston properties in Lee’s name, but trusted Lee and wanted to keep the properties. Biagina deposed that she did not agree to anyone else taking the Galston properties and getting a loan on her behalf.
In his affidavit sworn on 9 April 2015 Frank Rubino deposed that Lee was in the process of applying for finance for the Pine Valley property, but said that she would like to have the extra security of the Calderwood property (CB 1/264 [152]). Frank Rubino said that he told his father that, “Lee could borrow the money for Pine Valley but she wants the Calderwood property in her name if she does that.” He deposed that his father asked him what he thought about that and he said he did not agree with the proposal, and had told Lee that it would be enough if she borrowed the funds against the Pine Valley property and had that put into her name, and the Calderwood property could be used as security for the loan without being put in her name. He told his father that Lee wanted the security of the other property in her name, but he did not agree with it. Frank Rubino deposed that because he and Alfio did not want the Calderwood property to be in Lee’s name if she were to obtain finance, they did not progress the proposal of Lee’s funding the $1,050,000 required to discharge the ANZ mortgage (CB 1/264, [154]).
This is at odds with Lee Rubino’s and Biagina Rubino’s evidence. For the reasons below I have serious doubts about Biagina’s capacity in March 2016 to make her affidavit. Nonetheless, I prefer Lee Rubino’s evidence to that of Frank Rubino. I am satisfied that the reason Lee Rubino’s proposal for finance did not proceed was not because Frank and Alfio objected to both properties being transferred to Lee Rubino’s company, Lukazara, but because Lee Rubino decided not to proceed because she was separating from Frank.
I find that Lee Rubino withdrew from this proposal in December 2011 rather than January 2012.
Frank Rubino admitted that her withdrawal left him with only one option and that was “to deal with the devil in the form of George Dimitriou” (T321.40 corrected to record the answer “Yes” T400).

Engagement of Dimitriou

Frank Rubino deposed that Russo advised him to contact Dimitriou to arrange finance. Russo denies this and I accept his denial. Frank Rubino admits that Alfio told him that he would also like to keep the Pine Valley property and, if possible, the Arcadia property. He deposed that after the signing of the Farm Mediation Agreement (that is after 20 December 2011) he telephoned Dimitriou. He said he had not had any contact with Dimitriou since he stormed out of his office during a meeting in May 2011. He says that he asked Dimitriou if he could arrange finance for the discharge of the Pine Valley property and, if possible, the Arcadia property. He said his parents needed the funds before 16 January 2012. He deposed that Dimitriou said:

“Ok. I can maybe arrange some short-term lender for both Pine Valley and Arcadia. Maybe, for a period of three to four months. That will give me time to arrange a conforming bank loan on a longer term basis.”

Frank Rubino said that he understood that a “conforming bank loan” was a loan from a bank or financial institution.
Dimitriou said that in December 2011 he spoke with Frank Rubino who asked for his help. According to Dimitriou he complained that Frank had dumped him to go to Gatto and Prestia. Dimitriou deposed that a conversation to the following effect took place:

“Frank:   ‘George the situation is still bad. We haven’t the monies to discharge the Bank and give them what they want to save the family properties. George you need to help me. I have very little time. I have to settle by 5 January 2012.
Me:   ‘Frank I need to make sure we are all paid or else I am not going to help. You are aware that both properties are required to be used as security for any facility that we obtain.’
Frank:   ‘I understand that George. I have already spoken to Andrew and Sal. I know that if we can get the Galston properties out for $1,050,000. The Arcadia property can be saved for $1,650,000. If you can raise enough money on the Galston properties then we can pay a 10% deposit to the purchase Arcadia property. I need you to find some money so that I can settle with the ANZ.’
Frank:   ‘George, my family will honour all of our commitments, you have my word. Lee is now out of the picture as she was not prepared to help us. She has finally left. I am living with my parents.’”

Frank Rubino was aware that Lee Rubino had a very poor opinion of Dimitriou. She described him to Frank as a liar, a cheat and a conman, amongst other things.
Dimitriou gave the following evidence in cross-examination:

“Q. You never told Frank Rubino in late 2011 or in 2012 that you were looking for hundreds of thousands of dollars for fees out of this transaction did you?
A. He was aware what he owed. Didn't have to discuss it. He offered it to me and he said that he's happy to pay everybody's fees including mine, knowing full well he provided a security for our money.”

Dimitriou said that the security to which he referred were the mortgages previously provided to him. However, one of those was over the Cooranbong property which had been sold by the bank, and the other was the Arcadia property which was about to be sold by the bank in exercise of its power of sale as a first registered mortgagee, unless its mortgage could be redeemed. In any event, on Dimitriou’s admission, Frank Rubino agreed only to pay “everybody’s fees including mine”. Frank did not agree (at least at that point) to payment of any particular amount.
I think it likely that some such conversation would have taken place between Dimitriou and Frank Rubino. Dimitriou was upset that the Rubino brothers had gone or were going bankrupt and that companies that might have owed him money had gone into liquidation. It is probable that he would have said that he wanted his fees paid. It is clear from his subsequent conduct that he saw the opportunity to raise moneys on the security of the properties of Mr and Mrs Rubino for his own benefit.

Huybers and Dimitriou

Huybers was introduced to Dimitriou in about September 2011. She was asked by her brother, Mr Neil Arnott, to guarantee a loan for a company through which her brother did business in the construction industry. This was Green Global. Huybers became the sole director of Green Global but played no part in the management of the company. She owned a house in Enderlee Road, Clayfield valued at over $2 million that was subject to a first registered mortgage to the National Australia Bank to secure a debt of approximately $400,000. Wyse & Young acted for her in arranging a $500,000 facility through Winiata from the ANZ Bank that was secured by a second mortgage over the Enderlee Road property and guaranteed by her. Her arrangement with her brother was that he would service the loan. A small portion of the loan ($74,500) was applied to a business that Huybers conducted called Sandwich Girl. After payment of fees of $41,728.50 to Wyse & Young the balance was paid to a company that was set up for Huybers called Union Steel Pty Ltd (“Union Steel”) and then disbursed to the Green Global business account. This facility was entered into in October 2011. The National Australia Bank loan was refinanced through the ANZ.
In about November 2011 Dimitriou and Huybers had a conversation to the following effect:

“[Dimitriou]:   We will get some more equity out of your house and make some investments and from the proceeds we can pay down all the loans and also make some good money from the profits. We’ll think of a way for you to earn an income.
[Huybers]:   Have you got any ideas?
[Dimitriou]:   I’ll talk to my mate Danny; he manages investment properties on the Gold Coast. He’s a millionaire, maybe there will be an opportunity for you to work for him.
[Huybers]:   That would be great, because the catering doesn’t earn me very much money. Frankly, I’ll do anything.”

By the end of December 2011 the $500,000 facility had been disbursed. Huybers retained $59,000. However, her brother did not make any repayments. Dimitriou said that he would figure something out so that Huybers could pay down the loan with the ANZ Bank. In about December 2011 she had a telephone conversation with Dimitriou to the following effect:

“George said:   ‘Because of the position I’m in I’m often privy to good deals when they come up.’
I said:      ‘That sounds great’
He said:   ‘I’ve got some clients, the Rubinos, I really like them. They’re really good people. The father was an immigrant who worked the land and made a lot of money out of flowers. They need to raise some money short term to save the parents’ property from the bank. You and I will be the directors of this new company Pineview Property and it will borrow money and hold the property. If you agree to be a director of the company, you will be paid a fee of $100,000.’
I said:   ‘I need money to pay off Neil’s loan and that would help me do that. I really like the idea of helping them out as well. But how does this Pineview loan get repaid?’
George said:   ‘Don’t you worry about that, you’re just a figurehead. The Rubinos will look after the repayments, it’s really their loan. After this we can do other deals, these kinds of things come up all the time, we’ll just put you in them, and by the end of the year your debt will be gone. We’ll meet up for lunch when you’re in Sydney and we’ll talk about it then.’”

Dimitriou denied telling Huybers that she would be paid $100,000 merely for providing the loan she later provided and becoming a director of Pineview. He said she was entitled to be paid $25,000 for having agreed to be a “stand-in director” of Pineview, and $25,000 for providing her loan (T681). I prefer Huybers’ evidence.
During the week after Christmas 2011 Dimitriou told Huybers that Frank Rubino had his house for sale, that he and his wife were going through a messy divorce and that there was an opportunity for him and Huybers to borrow money and buy the property cheaply and subdivide it. Huybers said she was interested. She and Dimitriou visited the Arcadia property on 31 December, but did not inspect the house. Lee Rubino was there. Jetson also attended and spoke to Lee Rubino alone. Dimitriou and Huybers then visited the Pine Valley property and Dimitriou introduced Huybers to Frank Rubino who was there. Lee Rubino arrived a few minutes later and there was a confrontation, and she ordered Dimitriou off the property.
Huybers did not at this point have any money to lend the Rubinos. The $570,000 she advanced on 17 January 2012 was borrowed from the ANZ Bank by Dimitriou’s working with Winiata to obtain a further loan on security of her property in Clayfield. Huybers agreed in cross-examination that as a result of documents signed by her in December 2011 she was indebted to the bank for over $1.5 million and had $600,000 available to invest (T407-409), but it appears from bank statements that the additional amount borrowed was $570,000.

Emails between Dimitriou and Winiata

On 22 December 2011 Dimitriou sent an email to Winiata referring to a deadline of 10 January 2012 and stating that the Calderwood property had been valued at $1,350,000, the Pine Valley property at $1,390,000 and the Arcadia property at between $1,950,000 and $2,595,000. He said:

“Have a deadline to discharge away from ANZ on the 10th January where as [sic] 2,700,000 gets handed over 3 property titles get handed back.
…
Stamp duty will have to be paid as I suggested best they get sold by way of contract of sale.
Or
Niece at 28 wants Arcadia and Galstone and the unencumbered prop can be used as security it will have zero debt.” (Emphasis added.)

This contemporaneous statement to Winiata corroborates Dimitriou’s oral evidence that he discussed with Frank Rubino the method that was adopted of raising funds, namely that the properties be “sold”.
Dimitriou communicated by email with Winiata in more detail on 31 December 2011. The email correspondence was sent through the email address of Ms Teri Dawson, who was Winiata’s wife or partner.
On 31 December Dimitriou wrote as follows:

“This is the situation,
All three properties currently with ANZ.
1st property we will have title with no debt owing – value 1,350,000
That can only happen when we pay over the following, ANZ either want the keys for both properties or the Bank Cheques.
2nd Prop – Galston we need 1,050,000 – value 1,350,000 currently rented.
3rd Prop – Arcadia 1,650,000 value agreed propel 12 months ago 2,575,000 MJ 14 months 1,950,000 that was requested down.
So I thought the following,
2 sales contracts separately –
For Galston at 1,050,000 to someone in Trust – show the payment made of 20% to the vendor-
Second Valuation needed for Stamp Duty purpose – now due to land and house I think Stamp Duty is on a different scale on Transfer – probably use Susan in a Trust Set up – Susan – can be the private lender the family will pay her the fees for that probs 20k for her trouble.
There’s the car issue sorted
For Arcadia at 1,650,000 to someone in trust – show the payment made to Vendor ie deposit 20% and stamp duty paid and calculated. Property bought for investment purposes.
Second Valuation needed for Stamp Duty purpose – now due to land 40 acres and house I think Stamp Duty is on a different scale on Transfer – probably use Danny in a Trust Set up –
At Settlement the Galston unencumbered property transferred to the company trustee and the trust, so as the assets are quantified.
We then re finance all or even just the unencumbered or sell it to the niece or re finance in business 1mil pay back trustee directors on both for the use of there [sic] money – raise the money.
The trust set up – Director of Trustee Co Danny – benificiaries [sic] Nicole and her brother Tony Rubino 21 and 28 year old
Then We do a share transfer to the Beneficiaries – set up a new trustee director – being the beneficiaries and transfer the shares of the trustee company
So monies needed to be raised to payback based on unencumbered property
200k my outstanding lend amount –
Danny fees lend outstanding 28k
3% of total lend amount split between you and I.
Arcadia – Dannys [sic] 20% returned and also stamp duty returned and fees for the lend $-
Galston – Dannys and Susans [sic] money Returned plus interest and costs and stamp duty paid monies.
20% deposit raised by Danny on Arcadia – based on $1,650,000 = 345k plus stamp duty as needed at settlement to supplement your monies raised (can you calculate stamp duty, based on this type property)
20% deposit raised by Danny on Galston – based on $1,050,000 = 210k plus stamp duty as needed at settlement to supplement your monies raised (can you calculate stamp duty, based on this type property)
Just need 2 new sales contracts
2 transfers for new Purchase
To raise money to pay back everyone –
1 trust – 1 trustee company – trustee director Nicole – beneficiaries Nicole and Brother
As there is no debt against this prop the trust cab just refinance to pay everyone back.
You’ve done loans for Danny and Susan so I can make Sarinda 1 trustee
company and Susan of Green Global the other –
susan has trust already so that’s a bonus –
Danny has his trust as well so that’s a bonus –
Both investments props – both should be approved swiftly.
Can you work out stamp duty on both actually all three, the other prop may as well go to a trust set up once unemcumbered [sic].
Wow-geez they made me think! All up to you now”

Sarinda Pty Limited was a company owned by Kalischer.
The email is not easy to follow. It contemplates that the Pine Valley property would be transferred pursuant to a contract for sale to a company that would hold the property on trust and that the unencumbered Galston property (i.e. the Calderwood property) would also be transferred to the company and the trust. Dimitriou apparently believed that stamp duty on a different scale would be payable on a transfer of the Arcadia property. He contemplated a second valuation being obtained for the Arcadia property and that a trust would be set up using Kalischer with respect to that property. He contemplated that Huybers would be paid $20,000 for her trouble in relation to her being a private lender. The reference to the car issue being sorted is a reference to Dimitriou’s being engaged to help Huybers get out of a lease to Esanda Finance in respect of a Lexus motor vehicle. (Huybers says that Dimitriou told her that he would attempt to get somebody to purchase the car so that she would be relieved of her responsibilities under the lease, but it ended up with her handing over the car to a third party, and the car ended up in Dimitriou’s possession and registered to him.)
By his email Dimitriou contemplated that shares in the trustee company could be transferred to the beneficiaries who could be grandchildren of Mr and Mrs Rubino. Importantly he said that the moneys needed to be raised would include not only the moneys needed to repay short-term loans, but $200,000 for “my outstanding lend amount”, $28,000 being outstanding “fees lend” payable to Kalischer, the return of a 20 per cent deposit if paid by Kalischer on the Arcadia property, moneys to cover interest and costs and stamp duty and “three per cent of total lend amounts split between you and I”.
Dimitriou denied that this was an offer of a bribe or that a bribe was paid. He gave confusing and evasive answers when asked about that statement. He said that he would be charging the three per cent fee, but he also said that it was a reference to Teri Dawson raising a three per cent fee to charge to the Rubinos as finance broker (T779). But the moneys raised from the ANZ Bank did not include any fee for a finance broker. The bank agreed to lend $1,080,400 for the purchase of the Calderwood property. It deducted $5,736.20 from the advance for its fees and stamp duty, government charges and incidental costs (CB 4/1166). It advanced $920,320 for the purchase of the Pine Valley property and deducted from the advance $4,432.80 for its fees, government charges, stamp duty and incidental costs. The total amount deducted was $10,169 and the balance of $1,990,551 was paid to Wyse & Young and to Wyse Accounting. No amount was deducted for commission for Teri Dawson for acting as finance broker, and it was not suggested that the Rubinos paid or agreed to pay any such commission. Nor did Pineview pay any such commission. On the other hand, Wyse & Young International charged Pineview $66,023.76 for establishing the loans totalling $2,000,720 from the ANZ Bank. This was three per cent of the face value of the loans plus GST. I am satisfied that Dimitriou was offering Winiata money as an inducement to him to use his influence to have the loans approved.

Winiata responded later that morning advising on the stamp duty that would be payable on loans of $1.35 million, $1.05 million and $1.65 million. He said that he loved the proposed structure. He said that he had everything for Susan but would need Danny’s “NOAs” (notice of assessment) for 2010 and 2011. The reference to Winiata’s having everything for Susan is to his having arranged the loans to Huybers from the ANZ Bank referred to at paras [65], [67] and [70].
Dimitriou replied to Winiata stressing the need for urgency. He asked what area of the bank would handle the application and whether they would rely on sales contracts or would need valuations as well. He said that more time might be bought if at least one transaction were done and said:

“I suppose with Susans and Dannys money and mine we can probably discharge that one at $1,050,000. Leave them on titke so as the stamp duty not needed to be paid, so as we say buy the mortgage from ANZ at $1,050,000. We take there place. Then sell it soon after. [sic]
What we then do is put Danny trust and company as the Mortgagor – we then take possession then refinance to buy Arcadia using the unencumbered again as Danny trust.”

I think in this passage Dimitriou was referring to the sale of the Galston properties by Susan and Danny as mortgagees to a company that would hold them in trust for the Rubinos and would then refinance to raise money to buy Arcadia.
At this stage Dimitrou hoped that the ANZ’s mortgages over both the Pine Valley and the Arcadia property could be discharged.
Winiata responded later that day as follows:

“So if you pay ANZ $1.05m for Arcadia [scil. Pine Valley] from the funds you have this will hopefully give me time to set the facilities.
Note that the loans will need to be in Resi as bot h Susan and Danny already have $500K business facilities. This only allows me to extend another $500K in the business area.
So we need to put it through Resi under a trust structure. No limit on the size of the loan.
If your [sic] happy to put through ANZ, I’m happy to. I suggested ING so that it looks like an arm’s length transaction. ANZ will be faster as I know the process.
Also ANZ will rely on a contract of sale but also need a valuation completed. How recent are the current vals you hold?
If they are no more than 6 months I should be able to use them.
If not I can order a val through my system and usually the val company will go off the contract.
So I need to know exactly what you want to do!
First you payout Arcadia then I do the following below.
Susan – Green Global P/L ATF (Whatever Trust) – purchasing Arcadia ($840K lend)
Danny – Sarinda P/L ATF (Whatever Trust) – purchasing Galston ($1320m lend)
The new trust to purchase the unencumbered property ($1080m lend)
Cheers
Dave”

It may be noted that Winiata was proposing loans totalling $3,240,000. The moneys required to discharge the ANZ mortgages were $2,700,000.
On 6 January 2012 Dimitriou sent emails to Winiata at his email address at the ANZ Bank. One email was only partially reproduced, but was headed “Susan Heybers [sic] – Re-finance Investment facilities and the purchase of Arcadia Investment property”. He asked Winiata to “… supply nett settlement figures available so as I am able to determine which way to place Galston Discharge and her new Purchase of Arcadia property.” The email was headed “Precedent 1 out of 3”. The balance of this email was not tendered. A short time later Dimitriou sent a further email to Winiata headed “Precedent 2” which stated:

“Precedent 2.
Contract of sale on 2 Galson [sic] properties let’s say to Green Global atf trust Susie as director of trust or Danny new purchase trustee company and trust.
That’s [sic] secures the position Danny’s investment and Suzie and mine (as the investors) immediately so as the supplement value can’t be contested.
This must all happen by 12th Jan
Retail value on both $1,350,000 and $1,200,000 - = $2,550,000,
Purpose to raise costs plus stamp duty and out of pocket for Arcadia difference for deposit. Gear up Galson [sic] so as procurers easier second time round on take out and his wife can’t claim as she is unable any way –
Mr and Mrs sells two titles o say company A atf. Trust A
So as to sales contract in your business area say $1,050,000 plus.
Raise 80% of contract of sale = $2,040,000 therefore $1,050,000 plus stamp duty on $2,040,000 is 100k – total used thus far $1,150,000 so that leaves 990k –
250k back to George for monies owed to date.
28k back to Danny for monies owed to date.
10k back to Foley for monies owed to date = $288,000.00
Leaves $702k – that gets tipped in to the pool.
Frank will need to tip in the stamp duty of say 77k if he wants all properties in Two company structure trusts.
In turn will supplement the 702k
Then we lend $950,000 – equals to $1,650,000 equals the share of risk with owners – we keep title under the mortgage until 950k gets paid plus interest and costs.
Fees payable on to obtain - $950,000 plus $2,040,000 –
total $2,990,000
let’s say
100k Susan fee, risk fee, term roll over admin fee and interest on her borrowed 600k for 3 months until repaid
90k – Danny fee risk fee, interest on 350k 3 months – incl pre paid
120k – Fees prep documents mortgage etc inclusive of solicitors and documents lodged = 310k
So based on a $1,260,000 will need to be re paid based on a potential valuation of $2,575,000.
To get coacher [sic] they sell down Arcadia at $2,575,000 less debt by way of our company Mortgage $1,260,000 = $1,515,000 to go back onto
Galson [sic] at $2,040,000 leaves a $500 thousand dollar debt on both Galson [sic] properties retail valued at $2,550,000.
If in fact finance not able to be done, Frank unable to sustain repayment our risk is reduced And we keep property at Arcadia. Therefore not entering the sress of Galson [sic] and the elderly parents etc.
Arcadia currently is being moved out from. I will have the place cleaned up ready to sell or priced to sell for Frank and Family to make some money on.
Please keep this between you and I mate.
Just needed to get it all out of my head so as I can sleep tonight.”

Again, this email is not easy to follow. The first two paragraphs indicate that Dimitriou saw value in having the two Galston properties transferred so that it would secure Kalischer’s investment, Huybers’ investment and his, and that the “supplement value” could not be contested. Dimitriou was not asked what he meant by “supplement value”.
His proposal was that 80 per cent of the value of the Calderwood and Pine Valley properties would be borrowed, being $2,040,000. His calculation was that the $1,050,000 loan would be repaid and stamp duty would be paid, leaving on his calculation $990,000. From this sum, $250,000 would be paid back to Dimitriou for moneys said to be owed to date, $28,000 was to be paid back to Kalischer. This represented fees Kalischer contended were owing to him from a previous loan he had made available to the Rubinos. Ten thousand dollars was to be paid to Foley, leaving $702,000. He proposed that Frank Rubino would tip in the stamp duty of $77,000. “We” would lend $950,000. That sum, with the $702,000, would be enough to pay the $1,650,000 that needed to be paid to discharge the ANZ Bank’s mortgage over Arcadia. Seventy-seven thousand dollars stamp duty would be the duty on the purchase. There would be further fees totalling $310,000 charged on such a transaction. The result would be that the Rubinos would be responsible for paying the $2,040,000 loan and the $950,000 further loan ($2,990,000) plus $310,000 in fees ($3,300,000). There would be a $1,260,000 debt ($950,000 plus $310,000) on the Arcadia property that was valued at $2,575,000. If the Arcadia property were then sold and the $1.26 million debt was discharged, Dimitriou calculated that there would be $1,515,000 (in fact, $1,315,000) which could be applied in reduction of the $2,040,000 mortgage over the Galston properties leaving a $500,000 debt (scil. a $700,000 debt) on both Galston properties valued at $2,550,000. If Frank Rubino were unable to sustain repayment on the mortgages “our risk” would be reduced because the Galston properties were loaded with 80 per cent debt and the ANZ Bank would sell the Galston properties to recover the $2,040,000 advance. The alternative would be that Arcadia was not sold. It would be subject to “our company mortgage” of $1,260,000 which was only 50 per cent of the assumed value.
In substance Dimitriou would use the equity in the Galston properties and the Arcadia property to raise funds to pay himself $250,000 for moneys he said were owed, to pay Kalischer and Foley $38,000, to pay $190,000 to Huybers and Kalischer for the risks they assumed, and to pay $120,000 in further fees.
It is significant that Dimitriou concluded the email by imploring Winiata to keep what he was discussing between themselves. For the reasons which follow I am satisfied that, notwithstanding his denial, Frank Rubino was aware of the basic outline of the transaction and was talking to Winiata. But Dimitriou’s wish that Winiata not disclose the extent of the moneys Dimitriou intended to collect in fees and alleged debts makes it improbable that he disclosed those matters to Frank Rubino. That having been said, it is probable that Dimitriou told Frank Rubino that he would only assist if his fees were paid and as appears below, Frank Rubino was aware that there were surplus funds available from the loan with which to discharge other debts.

Contracts for sale of Calderwood and Pine View properties

Pineview was incorporated on 9 January 2012. Dimitriou said that the name Pineview was suggested by Frank Rubino who suggested the name because of views of pine trees from the properties. Frank Rubino denied this and went on to deny that there were such views, but this was contradicted by photographic evidence.
By 9 and 10 January 2012 Wyse & Young, through Jetson, prepared contracts for the sale of the Calderwood and Pine Valley properties. The draft contracts named Mr and Mrs Rubino as vendors and Pinevew as purchaser.
The contracts were falsely dated 7 December 2011. The purchaser’s solicitor was named as “c/- Wyse & Young International Pty Ltd”. The price stated on the contracts was $1,350,500 for the Calderwood property and $1,150,400 for the Pine Valley property, a total of $2,500,900. The contracts purportedly recorded the payment of deposits of 10 per cent by Pineview.
Both forms of contract bear what purport to be the signatures of Alfio and Biagina Rubino and an unidentified signature of a witness to their signatures. The plaintiffs say that the purported signatures of Alfio and Biagina Rubino are forgeries. However, a report of a handwriting expert, Ms Michelle Novotny, concluded that the signatures of Alfio and Biagina Rubino on the copy contracts for sale with which Ms Novotny was provided revealed numerous similarities and only isolated dissimilarities with a group of specimen documents (group 1 specimen documents) that it can be inferred contain genuine signatures of Alfio and Biagina Rubino. She concluded that there was evidence supportive of a proposition that the questioned signatures on the contracts were each written in original form by the writer of the group 1 specimens and there was no evidence to support the alternative proposition. The conclusion was qualified due to the questioned documents provided to her being photocopies.
Ms Novotny was not cross-examined and I accept her opinions. The Registrar General submitted two original documents and six copy documents to Ms Novotny for her opinion on the authenticity of signatures on those documents and submitted some 34 specimen documents containing what were assumed to be the signatures of Alfio and Biagina Rubino for comparison. Ms Novotny said that a comparison of the specimen signatures attributed to Alfio and Biagina Rubino revealed that they fell into two groups. The similarities observed on a comparison of the group 1 and group 2 specimens were superficial, although there were linking similarities between the signatures within each group. It can be inferred that the group 1 specimen signatures are genuine. They included Alfio Rubino’s driver licence, the Heads of Agreement signed with the ANZ Bank, and the transfer dated 8 March 2012 (which the plaintiffs admit to having been signed by Alfio and Biagina Rubino).
Specimen documents in group 2 bearing what purport to be the signatures of Biagina and Francesco Rubino that were not their genuine signatures included a deed bearing date 20 February 1999 between Alfio and Biagina Rubino and Frank and Lee Rubino relating to the terms on which Frank and Lee Rubino could occupy the Arcadia property and be compensated for the cost of building a house on it if the property were sold, a letter addressed to Ms Sandra Campagna (an employee of the ANZ Bank) from Frank Rubino on behalf of Rubino Holdings giving authority to a company known as Reconstruct Pty Ltd (a Dimitriou company) to liaise on behalf of the Rubino family in respect to loans with the ANZ Bank, a caveat in respect of the Arcadia land apparently consented to by Alfio and Biagina Rubino that was prepared in the name of Lee Rubino as caveator and claiming an interest in the land pursuant to the deed dated 4 October 1998, a mortgage expressed to be given by Lee Rubino over the Arcadia land in favour of Danny Kalischer as mortgagee in a document to be lodged by Dimitriou, and the transfer of the Arcadia property from Frank Rubino to Lee Rubino whose signatures were purportedly witnessed by Alfio and Biagina Rubino. Notwithstanding that someone other than them wrote their signatures on a number of documents, the signatures on the contracts are their signatures, unless a copy of their genuine signatures was cut and pasted onto the form of contract and then the document recopied. There is no indication of that having been done, but it is a possibility.
On 12 January 2012 Ms Gabrielle Klopf sent a draft contract for the sale of 45 Pine Valley Road, Galston to Jetson under cover of an email that said “Here is the contract that was prepared by us some time ago.” The special conditions she provided were included in the form of contract produced by Jetson. Klopf was employed as a paralegal by Russo. She deposed that in 2010 Frank Rubino attended a meeting with Russo. She was called into the meeting in Russo’s office and he asked her to prepare a contract for the sale of Frank’s parents’ properties and do the usual searches. She prepared a contract and left it on the file. She deposed that on about 12 January 2012 she received a telephone call from Jetson and Frank Rubino who was on speakerphone and that a conversation to the following effect took place:

“Andrew:    Gabrielle, I am sitting here with Frank who says you prepared a contract ages ago for the Galston properties.
Gabrielle:   I can’t remember.
Frank:   Gabrielle, its Frank. If you can find it can you send it to Andrew?”

Jetson kept a diary. His diary page for 10 January 2012 records “Alfio – Biagina to sign sale contracts”. His diary entry for 12 January 2012 records “Signed sale contracts”. He deposed:

“54   I think that I visited the Galston properties to have Alfio Rubino (Alfio) and Biagina Rubino (Biagina) sign documents, at the request of George, on what to my recollection seems like only two occasions. I do not recall that I have any reason to believe that these two occasions were on dates other than on 10 January 2012 and 12 January 2012 in accordance with what it says in my diary.
…
59   I do not recall whether, when I went to visit the Galston properties on the day that I think was 10 January 2012, that Alfio and Biagina actually signed any documents. I am not sure whether Biagina was present on that day.
60   I do have a recollection that on the other occasion, which I can only assume was 12 January 2012 that I did actually have Alfio and Biagina sign documents or a single document.
61   However, I do not have any recollection of how many documents I had Alfio and Biagina sign and I do not have any recollection of what those documents were. It is entirely possible that I had Alfio and Biagina sign a Transfer document or contracts for sale, or some other type of document, or some or all of these documents. But I just have no particular recollection.”

Jetson had made a statutory declaration on 20 August 2013 in which he said he was instructed by Dimitriou to take the transfer document for the two properties to Alfio and Biagina Rubino and had the transfer document signed by them. He said in that statutory declaration that when the parents sat down he gave them the transfer document. He then declared that “they asked what it was and Frank and I explained that it was to help arrange financing for the second property”.
Jetson swore an affidavit on 23 October 2013 in which he said he did not recall any contract for sale between Alfio and Biagina Rubino and Pineview Property Holdings Pty Ltd. However, Jetson did not then have access to his diary and it is clear from his diary that he was aware of contracts having been prepared and it appears from his diary that he took the contracts to the Rubinos for their signature on 10 and 12 January. He accepts that when he met the Rubinos, Alfio Rubino asked what the documents were for and he said that “they are to help you get finance for the Pine Valley property”.
In 2013, 2014 and 2015 Jetson, who had terminated his relationship with Dimitriou, was sympathetic to the plight of Mr and Mrs Rubino. In an affidavit made on 29 October 2015 he said:

“28   I do not recall asking any employee of the Russo or Russo to provide a draft transfer. In or around March 2012 at the Office, George handed me some papers and said words to the effect of:
‘Take these over to the Rubinos at Galston, Frank will meet you there and you just need to get the parents to sign the papers to get the financing to get them away from the bank.’
I thought these documents to be the transfer documents.
29   I went to Galston, I met with Frank he went and got his parents and we met in an office in a shed on the property. Mr and Mrs Rubino said hello. Their English was not very good and we were not able to have a proper conversation.
30   Alfio exchanged words to the following effect:
Alfio:   What are these documents for?

Me:   They are to help you get finance for the Pine Valley Property.
31   At that time, my understanding was that the documents were to get finance to pay the bank so that the Rubino’s [sic] could get their other property. I never organized or helped George organize any short term finance for the Rubinos at any time, nor was I acting on behalf of the lenders giving the finance. I was just there at the direction of George to get signatures and leave.
32   Biagina Rubino looked at me and said words to the effect of:
‘Is it going to be alright. Are we going to keep our properties?’

I replied in words to the effect of:
‘Yes it’s going to be alright’.”

After Jetson was joined as a cross-defendant to Russo’s cross-claim he had to search for bank statements and in the course of doing so, located his diaries for 2011, 2012 and 2013 in a box in his garage. He used his diaries to prepare his affidavit of 1 April 2016. The cross-claim between Russo and Jetson was settled, but the Registrar General read some of the paragraphs of Jetson’s affidavit of 1 April 2016 and he was cross-examined on parts of his affidavit of 30 October 2015 that was not otherwise read. Parts of his affidavit of 1 April 2016 that were read incorporated paragraphs of his earlier affidavit, including paragraphs 28-32 set out above. In relation to those paragraphs Jetson said:

“62 I refer to paragraph [28] of my previous affidavit where I said that ‘I thought that these documents were transfer documents’. I do not remember the basis for which I said this in my previous affidavit. I think that I must have been thinking about transfer documents because everyone at the time was talking about the ‘transfer’. When I say ‘everyone at the time’, I mean the solicitors who assisted me to prepare my previous affidavit as well as Lee and Frank on all of the occasions, since 2013, that I spoke to them about assisting them with their case.

The next item 136 is for a payment of $190.82 made by Defined Garden Artistry for accommodation at Hills Lodge. There is nothing on the bank statement to tie that payment to accommodation provided for Huybers. Huybers denied that she was in Sydney “on this date”, apparently 4 July 2013. There is nothing to corroborate Dimitriou’s assertion that this payment was made for accommodation provided to Huybers. The cross-defendants have not discharged their onus of showing that it was.
The next credit pressed by the cross-defendants for accommodation at the Adina Apartment Hotel was for items 153 and 154 being accommodation at the Adina Apartment Hotel in December 2013. Huybers said that she stayed at the Adina Apartments on nights of 14 and 15 December 2013 because her Clayfield property was auctioned on 14 December and Dimitriou insisted that she come to Sydney and said he would cover all expenses since she had been thrown out of her place. She said also in relation to another item for travel on 17 December 2013 that Dimitriou had insisted that she come to Sydney and that all her expenses would be covered. She said the same in relation to expenses incurred for accommodation on 24 March and 14 April 2014. I accept that evidence. Huybers mistakenly thought that the two payments related to two rooms. That was not so. Rather, the period of her occupation was not 14 and 15 December, but 11-15 December. However, I accept her evidence that Dimitriou told her that her expenses of coming to Sydney would be covered by him and that had he not given her that assurance she would not have incurred the expenses. The cross-defendants are not entitled to a credit for these amounts.
The same applies to the subsequent accommodation expenses incurred by Huybers.
In addition to paying expenses the cross-defendants say that they or other companies associated with Dimitriou paid a further $28,908.96 to Green Global and $23,800 to Union Steel in 2012 and 2013. They also say that between 26 April 2013 and 10 April 2015 $131,470.27 was transferred to Huybers’ ANZ or NAB account and she was provided with cash of $3,600.

Union Steel and Union Steel Investments

There is no dispute that payments were made to Green Global, Union Steel and Huybers. Huybers says that of the moneys paid to her $53,125.29 was paid to her as fees for acting as a director of Pineview and $96,695.62 was paid to her for acting as a director of Union Steel. She deposed that Union Steel held properties on trust for Luigi (Lou) Zaurrini and Helen Zaurrini and that in about the end of 2012 she had the following conversation with Dimitriou:

“Dimitriou said: ‘Sue if you let us to us use your company Union Steel to hold property assets for Lou and Helen, we will pay you $50,000 a year’
I said: ‘okay that would be great, not a problem’”

There is some contemporaneous corroboration of this. On 6 March 2014 Huybers sent an email to Dimitriou complaining about lack of communication from Dimitriou and her financial position. In that email to Dimitriou she said:

“… I have been the front of Pineview and Union Steel without a single question. You told me there would be great financial benefits and I didn’t ask questions. Please help me and call me tomorrow. I’ve got no-one to help me other than you and that makes me very vulnerable. Please don’t just let another day go without contact.” (4/1452)

There is no evidence of any reply to that email. Were it not for the evidence of the Pineview transaction, one would be sceptical that such an agreement as that deposed to would be made. But a similar agreement was unquestionably made between Dimitriou and Huybers in connection with Pineview.
There was no evidence as to when Union Steel Investments was incorporated. Dimitriou agreed that some payments were made to Huybers for the request for the use of the company Union Steel (T1134). Dimitriou said it was Jetson who made the arrangement for her to be paid fees for the use of Union Steel for the benefit of the Zaurrinis (T1134). The cross-defendants claim credit in respect of 70 payments made by Union Steel Investments between 24 December 2012 and 10 April 2015 said to be for Huybers’ benefit. These include the six payments of rent referred to at para [326] above. The evidence in support of this claim is comprised of bank statements of Union Steel Investments showing various payments. The bank statements describe some of the payments as “loan to US” or “loan to Huybers”. Some are described as “Fee S Huybers”. Some are simply described as “Dir payment GD”; some as “US payment GD fee”; some as “US payment GD”; some as “D fee”; some as “US payment”.
Dimitriou said that he had no recollection of any conversation with Huybers in which he said that if she allowed him to use Union Steel to hold assets for the Zaurrinis she would be paid $50,000 a year. He denied that there was any conversation of a similar nature (T1116). He denied that he ever offered to pay Huybers any money for using Union Steel to hold assets for the Zaurrinis. However, he later admitted that some fees were paid to Huybers that were “initially for the request for the use of the company Union Steel Pty Ltd” (T1134). He said that the only such payments were those shown on bank statements as payment of director’s fees. At one stage in his evidence (T1117) he described payments from the bank account of Union Steel Investments as having been paid from “my” Union Steel Investments account. He was asked about payments which Huybers has characterised as being payments of Union Steel director’s fees and agreed that they were paid to benefit Huybers, but then gave the following evidence (T1117-1118):

“Q. Nothing to do with payment of director fees?
A. No, not at the time. There was a request I recall I distinctly recall a conversation that Lou Zourini had with me and it was insofar as I think there was a small arrangement for Susan to receive a small amount of monies and I may have represented as a fee in my transfer, yes, but it was only a very small amount of money. It might have been I think in the vicinity of around about probably $15,000 all up and I think that contributed to I think the use of the company and there was some expenses that I felt or Lou felt that was relevant that Susan may have incurred but we soon realised that those expenses weren't paid so basically there seems there would seem to be an overpayment if that be the case.”

Because of the late joinder of Dimitriou, Wyse & Young and Wyse Accounting they and Pineview and Huybers were not in a position to adduce their evidence on the quantification of Pineview’s and Huybers’ cross-claim at the conclusion of the hearing that concerned the other defendants. They sought a separate hearing of questions of quantification, but I was reluctant to make that order, not least because questions of credit arise on the quantification issues just as they do on other issues. The result was that the proceedings were adjourned for four weeks and directions were made for the service of further evidence by those parties on issues of quantification of the cross-claim and in particular the claimed repayments or set-offs that Dimitriou, Wyse & Young and Wyse Accounting asserted. Earlier in the proceedings, when Huybers was cross-examined by Foley, she gave the following evidence (T443):

“Q. He [Dimitriou] put you into a deal in respect of the Zourinis at Kelso?
A. The Union Steel was something completely separate where again I was being a director, but no money of mine was involved.
Q. You got payment for that, didn't you?
A. No, I did not.
Q. You got $60,000, or thereabouts?
A. No, I did not.
Q. What did you say you got from that?
A. I was supposed to be paid, but I wasn't.
Q. You say you never got any money from that, from the Union Steel, involving the Zourinis?
A. No, I did not.”

On the quantification hearing both parties took opposite positions. Huybers asserted that she was paid $96,695.62 for acting as a director of Union Steel, and Dimitriou asserted that she was paid no more than $15,000. Huybers said the evidence she gave on 18 April 2016 set out above was given on the basis that at that time she did not know that the money had come from Union Steel (by which I understood her to mean Union Steel Investments) and that she only found out where the payments had come from when having to work through a notice to admit facts from which she saw that payments of $1,000 or $1,500, here or there, came from “Union Steel accounts”. (T1101)
The provenance of the notice to admit facts was that Dimitriou made an affidavit on 21 April 2016 to which he attached what was called a “Susan Huybers reconciliation” that he said showed all the payments made by him or entities associated with him to Huybers or to others on her behalf or to entities associated with her. There was no other explanation of the schedule and none of the documents from which the schedule was prepared were exhibited. I rejected the schedule. But thereafter the cross-defendants served a notice to admit the facts stated in the schedule on Pineview and Huybers. Thus Huybers was saying that it was only after service of the notice that she found that payments had come to her from Union Steel Investments.
I asked Dimitriou whether the question asked by Foley, in which he put to Huybers that Dimitriou put her into a deal in respect of the Zaurrinis at Kelso, was put on his instruction and whether Foley’s questions to Huybers that “You got payment for that didn’t you?” and “You got $60,000 or thereabouts?” were put on Dimitriou’s instruction. Dimitriou’s answer, so far as I could understand it, was that Wyse & Young through Jetson and Zaurrini made an arrangement with Huybers, and that the fact asserted in the question that Huybers received $60,000 or thereabouts in payment for that, may well have been put on Dimitriou’s instructions, but:

“I was reflecting the $60,000 as moneys being paid to Union Steel, not on behalf of the Zaurrinis, to the Union Steel account. Not particularly on behalf of the Zaurrinis or any relationship between the Zaurrinis.”

Whatever this answer means, I am satisfied there was an arrangement to which Dimitriou was a party that Huybers would be paid fees for Union Steel being used to hold property on behalf of the Zaurrinis. The reasons for that were not explained.
Dimitriou gave contradictory evidence about the ownership of Union Steel Investments. He said there was no direct relationship between Union Steel Investments and Union Steel (T1157). He said that Union Steel Investments was set up at the request of Lou Zaurrini and that a Giovanni Spada, who was also a director of Union Steel “at that point”, set up Union Steel Investments. He said that Giovanni wanted out and Lou and he had an arrangement and that Lou asked Dimitriou to stand in and he then stood in as the director (T1158). I asked:

“Q. Who owns the shares in Union Steel Investments?
A. It was initially Giovanni Spada, but it does not trade, it does nothing at the moment and the shares have been transferred to myself and in trust for Lou Zourini.
Q. When was that done?
A. Probably around about 2013 or 14, I think.”

Dimitriou then contradicted that evidence. He said that the company register said that he owned the shares in Union Steel beneficially. When asked what the true position was, he said that that had to be correct. This is but one example of Dimitriou’s shifting testimony.
Dimitriou said that Huybers allowed Union Steel to be deregistered and Lou Zaurrini asked for it to be re-registered so that he could accommodate “the tax situation”. His explanation of that was unintelligible.
The upshot is that I cannot be satisfied that Union Steel Investments is a company, the shares of which are beneficially owned by Dimitriou. I cannot be satisfied that payments made by Union Steel Investments to Union Steel or to Huybers were payments that discharged obligations owed by Dimitriou (or Wyse & Young or Wyse Accounting) to Huybers, or were payments for which he or his companies are entitled to the credit. Accordingly, I do not accept the credits claimed at items 185, 186, nor items 67-126, or 173-183.

Cash withdrawals

The cross-defendants claimed credit for four cash deposits (described as cash withdrawals) said to have been provided to Huybers (items 168A-168E). The deposits were said to have been made on 28 March, 5 July, 17 December, 19 December and 23 December 2013 and total $3,600. Dimitriou exhibited copies of the bank accounts of Defined Garden Artistry from which it appeared that cash withdrawals were made at Baulkham Hills from an ATM machine on that account. He asserted in his schedule that the moneys withdrawn were provided to Huybers. In three cases he said they were provided by being deposited some days later into Huybers’ account with the National Australia Bank. In three cases her National Australia Bank account showed deposits of $500, $1,000 and $1,000 some days after the withdrawals made from the Defined Garden Artistry account. There was nothing to show that the moneys deposited were the moneys withdrawn some days earlier by Defined Garden Artistry. The alleged cash payments were not shown on the schedule of payments in the notice to admit facts to which Huybers responded. The evidence relied upon was thus the uncorroborated assertion by Dimitriou that the cash payments were made to Huybers. I do not accept his uncorroborated word.
The remaining items in dispute were items 5, 6, 11, 21, 22, 59 and 60 of Dimitriou’s schedule. They were all payments to the Green Global account. I accept that payments made to that account were made on Huybers’ behalf and she should give credit for them. She admits as much in respect of many of the payments. There is no reason to differentiate between the payments.
The first two payments in issue are payments of $2,000 and $908.96 made on 27 February and 7 March 2013 by Wyse & Young to the Green Global account. In relation to the first item Huybers deposed that Dimitriou said to her on or about 23 February 2013 words to the effect “I’m going to help you out and give you $2,000”, and she said “Thank you”. I accept that evidence, but I do not think that the transaction can be construed as an unconditional gift that would not be repayable irrespective of whether or not Dimitriou were later to be sued for the loss he caused Huybers. I think the cross-defendants are entitled to credit for that sum.
The sum of $908.96 was a payment made for Huybers’ accommodation at the Hills Lodge, Castle Hill, between 5 and 7 March 2013. There is no evidence that that money was paid by way of gift. The cross-defendants are entitled to a credit in respect of that sum as well.
Item 11 is a transfer from Wyse & Young to Green Global of $1,500 on 12 April 2013. Huybers says that no record of that payment is found in any bank statement, but in fact the payment appears in both the bank statements of Wyse & Young and of Green Global on 12 April 2013. The cross-defendants are entitled to credit for that sum.
Items 21 and 22 relate to two payments of $2,000 and $1,500 made on 15 February and 28 March 2013 by Defined Properties Investments to Green Global. I infer that the payments were made on behalf of Dimitriou or the other cross-defendants and they are entitled to credit for that sum.
Item 59 relates to a payment made on 19 July 2012 by Defined Properties Investments to Green Global of $20,000. Defined Properties Investments’ bank statement describes the transfer as “Pineview int fee”. The same description appears on Green Global’s bank statement. Thus this was a payment that was appropriated by the payer to whatever account is designated by the expression “Pineview int fee”. Clearly that does not mean the additional $10,000 that Dimitriou says was the interest repayable on the $570,000 advance. Rather, it relates to the additional fees that Dimitriou says total $50,000 and Huybers says was agreed to be $100,000 for Huybers’ agreeing to act in the transaction in the various roles as director, guarantor and lender. I have accepted Huybers’ evidence that it was agreed that she would be paid $100,000 for so acting. As I have said, she has not sued to recover any outstanding balance of that sum. In my view, the payment of $20,000 is not to be credited against her claim for the loss of $570,000 or $580,000.
Item 60 is a payment made on 10 September 2012 by Defined Properties Investment to Union Steel. The bank statements of both Defined Properties Investment and Union Steel describe the payment as a loan. Being so described as a loan from Defined Properties Investments to Union Steel I do not think I can take it to have been paid by or on behalf of Dimitriou, Wyse & Young or Wyse Accounting to Huybers. I reject that claim.
Item 31 relates to a payment made on 26 April 2013 from Defined Properties Investments to Huybers’ ANZ Account of $774.65. She deposed that this was a payment made to reimburse her for her accommodation at Adina Norwest and that Dimitriou had volunteered to pay for her accommodation if she came to Sydney. Had she thought that the payment was a loan she would not have come to Sydney. I accept that evidence. I reject the claim for that credit.
Huybers admits items 61, 169, 170, 171 and 172. These were payments made to her in 2013 and 2014 in sums ranging from $1,000 to $10,000. They total $30,500.
As noted at para [272] above, in cross-examination Huybers agreed that she withdrew some moneys from Pineview’s account. It was put to Huybers that she withdrew $49,000 from moneys the Rubinos had put into Pineview’s account to cover mortgage payments. She denied that. In his affidavit of 25 March 2016 Dimitriou exhibited copies of Pineview’s bank statements on which he made handwritten notations as to payments he asserted were payments made to Huybers personally, or in payment to Esanda for the Lexus motor vehicle, or otherwise for Huybers’ benefit. This covered the period from 20 June 2012 to 4 March 2013. He contended that $41,803 was paid to Huybers personally, $9,804 was paid off her investment loan, $5,087 was paid to Esanda in respect of the Lexus vehicle, and $7,000 was paid to Green Global.
Huybers did not respond specifically to this evidence. Nor was it addressed in the parties’ final submissions. The payments to Esanda Finance were made after Huybers had given up possession of the vehicle on Dimitriou’s assurance that he would deal with repayments. There was no evidence that Pineview appropriated the payments against Huybers’ loan as distinct from against her entitlement to $100,000 as her fee for her role in the transaction. Dimitriou did not dispute that Huybers only received $8,938.55 in respect of director’s fees from the two payments of $25,000 made on 11 April 2012 referred to at paras [297]-[299] above. Accordingly, I have not allowed any further credit in respect of payments made to Huybers out of Pineview’s account.
For these reasons, on Huybers’ claim for compensation for the loss of the $580,000 payable to her that was misapplied by Dimitriou, for which all of the cross-defendants are liable, the cross-defendants are entitled to a set-off of the following moneys paid by them, or, I can infer, on their directions, to or for the benefit of Huybers:

$3,300 ([329]);

$2,200 ([331])

$554.43 ([332]);

$385.09 ([340]);

$2,000 ([361]);

$908.86 ([362]);

$1,500 ([363]);

$3,500 ([364]);

$30,500 ([368])

$44,848.38

Huybers is entitled to judgment against Dimitriou, Wyse & Young and Wyse Accounting in the sum of $535,151.62 plus interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) from 9 March 2012.
The cross-defendants relied upon two emails written by Huybers late at night on 1 June 2014. She said:

“Basically payments made into my anz access (july 2012 to june 2013) from Pineview, Green Global, Union Steel and you are $44,997. Payments into my NAB (march 2013 to may 2014) are $80,606. Total $125,603. I have all the statements to show each transaction. I don’t really want to hand them over to support the caveat though bc they show all my personal spending and exactly where I’ve been on what dates. I don’t want Rubinos having all that information. I can have someone check them and make a sworn statement that they’re correct.

Expenses paid from my accounts for travel, accommodation are around $30,000. Have everything to back that up too. That amount coming off $125,603 minus $30,000 means only about $95,000 paid for me re rubino. Plus the accommodation and travel you have paid for the dates I have given you.”

She sent a further email later that night saying:

“Wait that’s wrong, I’m tired. You can put in the whole $125,603 – I just meant that the $30k in travel/accom has been paid out of the $125,603”

The reference to travel and accommodation is to expenses paid by Huybers for her travel and accommodation which she had paid out of the $125,603 she calculated had been paid to her. In this email she did not discriminate between payments made for acting as a director of Pineview or allowing Union Steel to hold property for the Zaurrinis and other payments made to her that could be applied in reduction of her loan. She said that when she did the email, which was late at night, she “just added up everything in total that I could find that had been paid towards me at that stage regardless of putting it in categories …”. I accept that evidence. I would draw the same inference from the face of the email. Accordingly, the email is not inconsistent with the conclusion I have reached.

Orders

For these reasons I make the following declarations and orders:

1. The plaintiffs’ claims for relief against the second, third and fourth defendants be dismissed.

2. The cross-claim of the fourth defendant (the second cross-claim) be dismissed, save as to costs.

3. On the third cross-claim:

(a) order that the claims for relief by the cross-claimants against the first and second cross-defendants (the plaintiffs) be dismissed (save as to costs);

(b) give judgment for the first cross-claimant (Huybers) against the third, fourth and fifth cross-defendants in the sum of $535,151.62 plus interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) from 9 March 2012;

(c) declare that the third, fourth and fifth cross-defendants are liable to indemnify the first cross-claimant against her liability to the first defendant (the ANZ Bank) in respect of her guarantees of the moneys borrowed by the second cross-claimant (Pineview) from the ANZ Bank;

(d) give judgment for the second cross-claimant (Pineview) against the third, fourth and fifth cross-defendants in the sum of $1,276,389.29, plus interest in accordance with s 100 of the Civil Procedure Act from 9 March 2012;

(e) declare that the third, fourth and fifth cross-defendants are liable to indemnify the second cross-claimant against its liability to the ANZ Bank in connection with the mortgages given by it to the ANZ Bank on or about 9 March 2012 and in respect of any liability the second cross-claimant might have to the first and second cross-defendants in respect of payments made or liabilities incurred by the second cross-claimant otherwise than in the proper performance of the trusts on which the second cross-claimant holds the properties at Calderwood Road and Pine Valley Road, Galston for the first and second cross-defendants;

(f) Reserve the proceedings for further consideration and give the cross-claimants liberty to apply in respect of the working out of the declarations in para 3(c) and (e), or in respect of any application for proprietary relief or an account of profits in respect of the use of moneys of the cross-claimants misappropriated by the third and fifth cross-defendants.

I will hear the parties on costs.

Decision last updated: 30 June 2016

Medium Neutral Citation:	Rubino & Anor v Pineview Property Holdings Pty Ltd & Ors [2016] NSWSC 904
Hearing dates:	11-14; 18-22; 26 April 2016; 17 and 18 May 2016; 16 and 17 June 2016
Decision date:	30 June 2016
Jurisdiction:	Equity
Before:	White J
Decision:	Refer to para [376] of judgment.
Catchwords:	REAL PROPERTY — Loss of interest in land — Claim for compensation out of Torrens Assurance Fund — Real Property Act s 129 — Plaintiffs transferred ownership of real property to second defendant — Second defendant mortgaged properties to secure loan — Proceeds of loan disbursed largely to the benefit of third, fourth and fifth cross-defendants to third cross-claim — Plaintiffs claim to have been deceived into signing transfer documents — Whether plaintiffs deprived of their interest in land by fraud — Plaintiffs intended second defendant to raise finance by becoming the registered proprietor of the properties and borrowing moneys on security of them — Signatures on transfer documents not procured by fraud — Claim against second defendant dismissed — Claim against Registrar General dismissed TORTS — Negligence — Whether fourth defendant breached duty of care by failing to take reasonable care to ensure certificate of title used only as instructed — Solicitor not retained to advise on wisdom of proposed transaction — Certificate of title used only as instructed by plaintiffs — Whether fourth defendant had duty to disclose known facts concerning third cross-defendant to third cross-claim’s discredit — Plaintiffs had prior experience of third cross-defendant to third cross-claim’s business practices — No duty of care — No breach of duty in any event EQUITY — Breach of fiduciary duty — Deceit — Whether third, fourth and fifth cross-defendants to third cross-claim owed a fiduciary duty to cross-claimants to third cross-claim — Whether third cross-defendant to third cross-claim deceived first cross-claimant to third cross-claim — Whether excess borrowed moneys disbursed without authority — Excess of moneys borrowed to purchase plaintiff’s property intended to be used to discharge debts of plaintiffs and first cross-claimant to third cross-claim — Excess moneys disbursed by third cross-defendant to their own benefit without knowledge or authority of cross-claimants — Third, fourth and fifth cross-defendants to third cross-claim breached fiduciary duty owed to cross-claimants to third cross-claim — Third cross-defendants to third cross-claim deceived first cross-claimant to third cross-claim — Judgment in favour of cross-claimants to third cross-claim
Legislation Cited:	Civil Liability Act 2002 (NSW) Civil Procedure Act 2005 (NSW) Consumer and Competition Act 2010 (Cth) Environmental Planning and Assessment Act 1979 (NSW) National Consumer Credit Protection Act 2009 (Cth) Real Property Act 1900 (NSW)
Cases Cited:	Abigroup Pty Ltd v Abignano (1992) 39 FCR 74 Australia and New Zealand Banking Group Ltd v Huybers [2014] NSWSC 720 Australian Hardboards Ltd v Hudson Investment Group Ltd [2007] NSWCA 104; (2007) 70 NSWLR 201 Breen v Williams [1996] HCA 57; (1996) 186 CLR 71 Cassegrain, Felicity v Cassegrain, Denis [2016] NSWCA 71 Hardoon v Belilos [1901] AC 118 Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 Re Application of Sutherland and Arnautovic [2014] NSWSC 821 Rubino v Australia and New Zealand Banking Group Ltd [2014] NSWCA 362
Category:	Principal judgment
Parties:	Lee Rubino as executor of the estate of the late Alfio Rubino (1st Plaintiff/1st Cross-Defendant on 3rd Cross-Claim) Biagina Rubino (2nd Plaintiff/2nd Cross-Defendant on 3rd Cross-Claim) Francesco Rubino (4th Cross-Defendant on 2nd Cross-Claim) Pineview Property Holdings Pty Ltd (2nd Defendant/2nd Cross-Claimant on 3rd Cross-Claim) Registrar General of NSW (3rd Defendant) Salvatore Russo (4th Defendant/Cross-Claimant on 2nd Cross-Claim) Susan Huybers (1st Cross-Claimant on 3rd Cross-Claim) George Dimitriou (1st Cross-Defendant on 2nd Cross-Claim/3rd Cross-Defendant on 3rd Cross-Claim) Wyse & Young International Pty Ltd (2nd Cross-Defendant on 2nd Cross-Claim/4th Cross-Defendant on 3rd Cross-Claim) Wyse Accounting Pty Ltd (3rd Cross-Defendant on 2nd Cross-Claim/5th Cross-Defendant on 3rd Cross-Claim) Andrew Jetson (5th Cross-Defendant on 2nd Cross-Claim)
Representation:	Counsel: M W Young SC (Plaintiffs and 1st & 2nd Cross-Defendants to 3rd Cross-Claim and 4th Cross-Defendant to 2nd Cross-Claim) J Donohoe (2nd Defendant and 1st Cross-Claimant on 3rd Cross-Claim) (11-26 April 2016) M Auld (2nd Defendant and 1st Cross-Claimant on 3rd Cross-Claim) (17 May – 16 & 17 June 2016) C Webster SC with J Shepard (3rd Defendant) D A Allen (4th Defendant/Cross-Claimant on 2nd Cross-Claim) M Foley, Solicitor (1st-3rd Cross-Defendants on 2nd Cross-Claim and 3rd-5th Cross-Defendants on 3rd Cross-Claim) Solicitors: Bransgroves Lawyers (Plaintiffs and 1st & 2nd Cross-Defendants to 3rd Cross-Claim and 4th Cross-Defendant to 2nd Cross-Claim) Gardner Ekes (2nd Defendant and 1st Cross-Claimant on 3rd Cross-Claim) Land & Property Information (3rd Defendant) Russo Partners (4th Defendant/Cross-Claimant on 2nd Cross-Claim) Foleys Lawyers (1st-3rd Cross-Defendants on 2nd Cross-Claim and 3rd-5th Cross-Defendants on 3rd Cross-Claim)
File Number(s):	2013/301976