Selemidis v Theonas
[2015] VCC 1029
•5 August 2015
| IN THE COUNTY COURT OF VICTORIA | Revised (Not) Restricted Suitable for Publication |
AT MELBOURNE
COMMERCIAL DIVISION
GENERAL CASES LIST
Case No. CI-14-03069
| DIMITRA SELEMIDIS (FORMERLY KNOWN AS “DIMITRA VRETTAKOS”) | Plaintiff |
| v. | |
| GEORGE THEONAS | Defendant |
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JUDGE: | His Honour Judge Anderson | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 8-10, 13-16, 23, 24 and 28 July 2015 | |
DATE OF JUDGMENT: | 5 August 2015 | |
CASE MAY BE CITED AS: | Selemidis v. Theonas | |
MEDIUM NEUTRAL CITATION: | [2015] VCC 1029 | |
REASONS FOR JUDGMENT
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Catchwords: Contract – Loan agreement – Later “contra” arrangement setting off repayment of the loan against the deposit to be paid on a separate contract of sale of real estate – Whether the lender was bound by her signature affixed to the amendment to the loan agreement – Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 followed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J. Foster | Alpass & Associates |
| For the Defendant | Mr P. Duggan | Russo Pellicano Carlei |
HIS HONOUR:
1Dimitra Selemidis married her second husband, George Vrettakos, on 1 November 2009. Ms Selemidis first met George Theonas at the wedding. Mr Theonas and Mr Vrettakos had been friends for about 5 years. During 2010 and 2011, their lives intermeshed.
2In this proceeding, I must examine three commercial transactions:
a.on about 30 May 2010, Ms Selemidis advanced the sum of $230,000 to a company, Malvern and Williams Road Developments Pty Ltd (“Malvern Road”). Mr Theonas was a director of Malvern Road and he personally guaranteed the repayment of the loan to Ms Selemidis. Ms Selemidis obtained the funds for the loan by using a property she owned at Croydon as security for a loan from CCI Investment Management Ltd (“CCI”)
b.on about 11 September 2010, Ms Selemidis and Mr Vrettakos signed a contract of sale for the purchase of a property at Beaumaris with a purchase price of $1.2 million from Raffaele and Maria Sinopoli. A deposit of $200,400 was to be paid, as to $400 forthwith and $200,000 on 28 February 2011;
c.on about 12 September 2010, Ms Selemidis signed an “amendment to agreement” which authorised Mr Theonas to pay to Mrs Sinopoli the balance of the deposit of $200,000 on the contract of sale of the Beaumaris property. Together with a further payment of $30,000 to Ms Selemidis before 30 May 2011, this would “constitute full and final settlement” of the loan agreement between Ms Selemidis and Malvern Road.
3The parties to the proceeding view these events from entirely different, and inconsistent, perspectives. Mr Theonas said that Ms Selemidis and Mr Vrettakos bought the Beaumaris property from Mr and Mrs Sinopoli in September 2010, intending to proceed with the purchase and live in it as their family home.
4Because Mr Theonas knew Mr and Mrs Sinopoli, and there were loan monies outstanding from Mrs Sinopoli to him, he agreed to accept responsibility for the balance of the deposit of $200,000 owing under the contract of sale for the Beaumaris property. Together with a further payment to Ms Selemidis by 30 May 2011, this would discharge the obligation by Malvern Road to Ms Selemidis (and Mr Theonas’ obligation as guarantor) under the loan agreement. The deposit of $200,000 was paid to Mrs Sinopoli in a series of payments, and a further $30,000 was paid by Ms Selemidis. This, Mr Theonas said, constituted “full and final settlement” of his obligations under the loan agreement.
5Ms Selemidis had a substantially different version. She said that the contract of sale for the Beaumaris property was not a genuine transaction. Mr Theonas had told her that the Beaumaris property was one of many properties he owned and he reassured Ms Selemidis and Mr Vrettakos that there would be no need for them to proceed with the purchase under the contract if they did not want to.
6Ms Selemidis could not recall signing the “Amendment to agreement” dated 12 September 2010. She said that if she had signed the document, Mr Theonas had tricked her into signing it by covering the contents of the document when he asked her to sign it.
7The issues for determination in the proceeding are:
1. Whether Mr Theonas is required, as guarantor of the obligations of Malvern Road pursuant to the loan agreement dated 30 May 2010, to repay the balance of the loan sum of $230,000 to Ms Selemidis;
2. Whether Mr Theonas’ obligations as guarantor of the loan agreement were affected by –
a.the obligation assumed by Ms Selemidis and Mr Vrettakos, pursuant to the Contract of Sale of the Beaumaris property, to pay a deposit of $200,400;
b.the “Amendment to agreement” dated 12 September 2010 by which Ms Selemidis agreed to accept a further payment of $30,000 by 31 May 2011 and for Mr Theonas to pay the balance of the deposit for the purchase of the Beaumaris property of $200,000, in “full and final settlement” of his obligations under the loan agreement dated 30 May 2010.
3. Whether the “Amendments to agreement” dated 12 September 2010 was ineffective because:
a.of “mistake” on the part of Ms Selemidis as she had “no understanding as to the terms and effect of the document and no intention to execute the document as an amendment to the ... loan agreement” dated 30 May 2010;
b.whether Ms Selemidis was induced to sign the document by undue influence or in circumstances which constituted unconscionable conduct.
8I have determined that Ms Selemidis should succeed in her claim against Mr Theonas for the balance owing under the loan agreement. My reasoning is as follows:
a.there is no dispute between the parties that Ms Selemidis and Malvern Road entered into a loan agreement on about 30 May 2010;
b.Mr Theonas has directly repaid sums totalling $44,500 to Ms Selemidis;
c.Mr Theonas relies upon further payments in excess of $200,000 to Mr and Mrs Sinopoli between April 2009 and June 2013 as sufficient to discharge his obligations as guarantor of Malvern Road’s obligations under the loan agreement;
d.whilst Ms Selemidis and Mr Vrettakos executed a contract of sale for the purchase of the Beaumaris property, no action has been taken by Mr and Mrs Sinopoli to allege that Ms Selemidis and Mr Vrettakos are indebted to them in respect of the deposit on the balance of purchase price or for damages arising from the resale of the property;
e.the Amendment to agreement dated 12 September 2010 was executed by Ms Selemidis and, ordinarily, she would be bound by the agreement which she had affirmed by the signing of the document;
f.the Amendment to agreement required Mr Theonas “to pay $200,000 to Maria Sinopoli…on the 28th February 2011 and that these funds will form the balance of deposit due on the purchase of [the Beaumaris] property”;
g.it was only once the payments of $200,000, and a further sum of $30,000, were made, that this would “constitute full and final settlement” of the loan agreement;
h.Mr Theonas did not pay the sum of $200,000 to Mrs Sinopoli on 28 February 2011. Prior to 11 September 2010, he had paid a total of $61,981 to Mr and Mrs Sinopoli which, pursuant to the agreement between them and Mr Theonas dated 1 March 2009, was to be a loan from Mr Theonas (as lender) to Mr and Mrs Sinopoli (as borrowers) for the purpose of them making “monthly repayments” for the Beaumaris property;
i.Mr Theonas’ obligations under the Deed of Agreement with Mr and Mrs Sinopoli dated 20 September 2010 was to pay the $200,000 deposit owing by Ms Selemidis and Mr Vrettakos “due on the 28th February 2011 less any amounts owed by Moira and Raffaele Sinopoli to George Theonas”;
j.between 11 September 2010 and 28 February 2011, Mr Theonas paid a total of $24,355 to Mr and Mrs Sinopoli. These payments were the continuation of the payments Mr Theonas had previously been making, although they included an additional sum to cover the loss of rental income from the Beaumaris property after about 18 November 2010;
k.as Mr Theonas did not adhere to the terms of the Amendment to agreement dated 12 September 2010, there were no circumstances sufficient to constitute “full and final settlement” of the Malvern Road loan agreement or Mr Theonas’ obligations as guarantor under that agreement;
l.it would, however, be appropriate to allow the sum of $3,198.22 per month for the period of the occupation of the Beaumaris property by Ms Selemidis and Mr Vrettakos from 18 November 2010 to a date in May 2011, a period of 6 months (a total of $19,189.32). It would not be appropriate for Ms Selemidis to recover this sum;
m.a handwritten letter dated 11 June 2011 from Ms Selemidis to Mrs Sinopoli stating that, “the loan agreement between myself and Malvern – Williams Road with a personal guarantee from George Theonas is now finalised” does not accurately state the position as between Ms Selemidis and Mr Theonas, and does not affect his obligations as guarantor in respect of the balance of the loan unpaid and any accrued interest.
Credibility of witnesses
9Not infrequently, cases at trial require the determination of disputed facts. More often this arises because of problems of memory. Occasionally, the court is faced with inconsistent accounts where one or more of the parties, or a number of the witnesses, must know that significant parts of the evidence which has been given is untrue.
10This is such a case. It has involved evidence from a number of witnesses where there are serious concerns raised about their credibility. It is not easy, therefore, to pick one’s way through the farrago of lies and half-truths to reach the conclusions that are needed.
11The civil standard of proof involves the weighing up of various strands of evidence to decide what is “more likely than not” to have occurred. However, that process is not a simple one where the court is asked to draw inferences or to evaluate the evidence on one issue as the basis for accepting evidence on other issues. These issues may relate to an element of a cause of action or defence, or a matter that goes only to the credibility of a witness.
12In the present case, there are a number of immutable facts; certain transactions, the execution of key documents, the transfer of money recorded in bank or solicitor’s trust statements and the overall structure of a chronology framed by emails or other correspondence and documents.
13The respective versions of events put forward by the parties each has a general coherence. Mr Theonas’ version relies upon the words on the face of a few critical documents which bear Ms Selemidis’ signature. On the other hand, the plaintiff’s account has a persuasive force derived from the way in which each of the principal witnesses generally conducted themselves at the relevant time.
14The determination of this matter has required a careful assessment of the credit of the witnesses called by the parties, particularly as the versions of events put forward involved significant inconsistences.
15Ms Dimitra Selemidis: Ms Selemidis gave evidence over 3 days. Whilst being sworn as a witness, she became distressed and a short break was required before she could complete the taking of the oath. Her evidence, and the evidence of other witnesses, was interrupted on a number of occasions when she became distressed. At one time, an ambulance was called at the request of her counsel and the hearing was adjourned for the day.
16Ms Selemidis has a medical history which has included occasional psychiatric treatment over many years, apparently for anxiety and depression and other related conditions. Ms Selemidis’ evidence was generally given in a coherent manner. On occasions, her recollection appeared to be faulty. Although she insisted the version she had given was correct, it seemed clear by reference to documents that it was not.
17Ms Selemidis gave evidence that the contract of sale she signed in September 2010 was “blank” and did not contain the vendors’ names or the sale price. She said that the vendors’ names had been “written in” later on by Mr Theonas using his pen. In the particulars to paragraph 9 of the statement of claim, it is stated that, when Mr Theonas presented her with the contract of sale, “Having read the Particulars of Sale, the plaintiff told the defendant that she and George [Vrettakos] could not afford $1,200,000 for unit 4”.
18The contract of sale signed by Ms Selemidis is a printed form as prescribed by the Estate Agents (Contracts) Regulations 2008. In the “Particulars of Sale”, certain details have been typed onto the printed form, including the names and address of the vendors and the description of the property sold. Other details, including the names and addresses of the purchasers and the purchase price, deposit and dates for payment are hand written on the printed form.
19Ms Selemidis was insistent in her evidence that when she signed the contract it did not contain the names of the vendors or the details of the contract price. She gave evidence that she found out the vendors’ names when Mr Theonas hand-wrote them on the contract and she became aware of the contract price in later conversations between Mr Vretakkos and Mr Theonas.
20Ms Selemidis’ recollection was wrong in these respects and it is therefore possible that other parts of her evidence was unreliable. Further, Ms Selemidis gave evidence that she was misled or pressured, on occasions, by Mr Theona and/or Mr Vrettakos. Sometimes, Mr Theonas was not present, although it was suggested that on those occasions Mr Vrettakos was acting at the direction of Mr Theonas.
21I shall shortly make comments about the general unreliability of Mr Vrettakos’ evidence. In these circumstances, where Mr Selemidis relied upon what she was told by her husband, including what he said Mr Theonas had told him, this evidence must be treated with suspicion and not necessarily accepted as reliable evidence against Mr Theonas.
22Mr George Vrettakos: Mr Vrettakos is a self-admitted liar. He said in evidence that a statutory declaration completed by him on 5 July 2011, which supported Mr Theonas’ version of events in significant respects, was false. He said that he was now “telling the truth” in his oral evidence to the Court and the time for “telling lies” was over.
23I consider that, in these circumstances, I should scrutinise his evidence with great care and generally look for supporting evidence, either from other witnesses or from the contemporaneous documents, although not those authored by Mr Vrettakos.
24Mr Vrettakos and Mr Theonas were close friends. Mr Theonas was chosen as the godfather of Mr Vrettakos’ and Ms Selemidis’ daughter. Mr Vrettakos and Mr Theonas spent a lot of time in each other’s company, including business trips overseas.
25In February 2010, Mr Vrettakos was accused by his employer, the Commonwealth Bank of Australia, of arranging loans in inappropriate circumstances which resulted in losses to the bank of about $3m. Although Mr Vrettakos said that these transactions were evidence of a “particular culture” at the bank, he nonetheless agreed to sell his Doncaster home and pay over $1m compensation to the bank.
26Mr Theonas was not involved in these transactions although he agreed to be present, presumably to support Mr Vrettakos, at a formal interview conducted by the bank’s investigating officer in early March 2010. Mr Theonas suggested to Mr Vrettakos that he should keep this matter secret from his wife.
27Mr Vrettakos’ relationship with his wife appears to have been problematic. They married in November 2009 and Ms Selemidis was pregnant by early 2010. Mr Vrettakos kept from her the information that his employment would terminate and their home would need to be sold. Mr Vrettakos was frequently absent from home and he apparently also deceived Ms Selemidis in their marriage. Their financial situation was desperate for much of the time. It is likely that Mr Vrettakos made promises and exaggerated to his wife the likely financial returns from the projects he and Mr Theonas were involved with.
28Mr Vrettakos, and Mr Theonas and Dr Con Perkoulidis, gave evidence of the “deals” or projects they undertook, both together and separately. The evidence was fairly unspecific, but seemed to involve:
a.the prospect of incredible returns upon relatively small investments. For example, Dr Perkoulidis gave $100,000 cash through Mr Vrettakos to a Pakistani official on the promise that Dr Perkoulidis would receive $1m from Mr Vrettakos two to four weeks later;
b.overseas travel to destinations including Hong Kong, China, Abu Dhabi and Dubai;
c.short-term finance being available between them and from what seemed to be genuine investors like Mr John Casey without the need for any coherent explanation. On one occasion, Mr Casey transferred $80,000 to Mrs Sinopoli’s bank account at the verbal request of Mr Theonas.
d.the projects included the onselling of broadacres north-west of Melbourne for residential development, a low cost housing development overseas and the supply of prescription medication to Pakistan.
29Although, the details of these “deals” were sketchy, it was apparent that Mr Vrettakos and Mr Theonas were regularly involved in investments with significant financial risks and the potential for huge returns, the benefits of which they were prepared to share around with the other participants. When money was tight, assistance would be offered to others if it were needed.
30It was unclear from the evidence whether Mr Vrettakos or Mr Theonas was the driving force behind these deals. Each of them suggested that the other had the primary responsibility. Mr Vrettakos said that he was financially dependent on Mr Theonas and was, as a result, required to “persuade” Ms Selemidis of the need for her to enter into transactions with Mr Theonas and to execute various documents.
31Mr George Theonas: Mr Theonas had previously worked as a financial advisor. In this regard, he commanded respect from Dr Perkoulidis, Mrs Maria Sinopoli, Mr John Casey and Mr Kleanitie Hatziladas for the perspicacity of his investment advice, but also for his reliability and trustworthiness.
32There were a number of points of conflict in the evidence where independent evidence might have assisted in determining which evidence was more credible. Two examples were:
a.both Ms Selemidis and Mr Vrettakos said that they had inspected the Beaumaris unit in the presence of Mr Theonas and not, as Mr Theonas and Mrs Sinopoli stated, with the real estate agent. The male tenant had been present during the inspection. Neither the tenant nor the estate agent gave evidence;
b.Mr Vrettakos said that Mr Theonas had assisted Ms Selemidis to refinance her Croydon property with the ANZ bank in about June or July 2011 and had provided fraudulent documents in support of the application to the bank suggesting that Ms Selemidis was in regular employment and had the capacity to service the loan.
33Both these matters were significant in the context of the disputed transactions:
a.the inspection of the Beaumaris unit with Mr Theonas was said by both Mr Vrettakos and Ms Selemidis to be the occasion upon which Mr Theonas repeated that he was the real owner of the unit and that Mrs Sinopoli and her husband were only on the title “as a front for tax purposes”;
b.on 11 July 2011, Ms Selemidis signed the letter drafted by Mr Vrettakos acknowledging that Mr Theonas’ personal guarantee was “now finalised”. Mr Vrettakos justified the pressure he applied to his wife to have her sign the document on the basis that otherwise Mr Theonas would not have “assisted” Ms Selemidis with her refinancing application.
34In determining the issues in relation to the execution of the contract of sale, the Amendment to agreement in September 2010 and the letter to Mrs Sinopoli in June 2011, there are matters of conflict which may have been clarified by further evidence. I cannot, of course, speculate as to what evidence might have been given, if appropriate witnesses had been called or documents produced.
35One example where further evidence did point up a probable false denial by Mr Theonas, was in relation to a conversation about which Mr Vrettakos gave evidence and which was said to have taken place at Café Paradiso opposite the Rivoli Cinema in Camberwell in July 2014.
36In the conversation, Mr Vrettakos said he told Mr Theonas that Ms Selemidis “wanted her money”. Mr Vrettakos said Mr Theonas’ reaction was that, “he started laughing and he goes, ‘Let her take me on.’ Then I said to him, I said, ‘George, if it goes to court, I’m gunna say the truth and if I say the truth I’m gunna go to gaol. I’ll lose my kid. Just pay her.’ Then he said to me, ‘Don’t get served. What are you worried about? Don’t get served.’ Then he said to me, ‘Just go overseas and no-one will touch you.’ Then towards the end of that conversation he started laughing and he said ‘She’s a loon and someone should grab a rifle and do what they’re supposed to do.’ The word he used it was in Greek, it was toufeki. Toufeki in Greek has two meanings, it’s either rifle or shotgun”.
37During cross-examination of Mr Vrettakos, Mr Theonas’ counsel Mr Duggan said, “Mr Theonas will also say that at no time has he ever said anything about anybody shooting or somebody should shoot your wife?---is that what he’s saying? Would you like to see the video? I have it. I have him on video saying exactly that, and telling him not to get served, on video. So if he’s going to say that, please do. I’ve got the video”.
38Later, after the video recording had been produced and played by counsel in their chambers, Mr Duggan asked Mr Vrettakos, “I put it to you that nowhere on that video did he speak of anyone shooting your wife?---Well I’m sure you haven’t heard that video, Mr Duggan, because he was perfectly clear and the word ‘toufeki’ is there”.
39Mr Duggan did not ask Mr Theonas about the conversation during evidence in chief. During cross-examination, plaintiff’s counsel, Mr Foster asked Mr Theonas about the conversation with Mr Vrettakos at the restaurant. Mr Theonas said, “We had banter, ‘eff this’ and ‘he’s an arsehole’ and ‘I’ve got this $2 million’ and I – it was talking buillshit. We were having banter. He was carrying on about his wife. He was trying to entrap me in banter. I go, ‘Well, mate, get a toufeki.’ It’s a colloquial term for ‘What a ball-breaker. Get a gun, she’s a ball-breaker”.
40Then Mr Foster asked, “So you agree that you used that word?” To which Mr Theonas responded, “Yes, I do. I reheard it. Talking about women in general, ‘Oh, yeah, they’re all the fuckin’ – et cetera, you know. ‘Oh, she’s gunna get me, I’ve got to avoid her’ I’m thinking, ‘What the fuck’s’ – thinking, ‘Yeah, well, go overseas, man. Void the subpoena. Go get a toufeki.’ ‘Move on’ in other words is – that’s the context of the conversation”.
41The recording is of poor quality, but as best as can be deciphered, the relevant passage is as follows:
V: But she told me mate. She said, “you stole my money, you and your mate”.
T:Mate, the problem you’ve got is [indistinct], how do I explain it. Too much with her …too much…should have told her to go fuck herself in the beginning and it’s easy to say now, it’s easy to say, yeah, yeah but whatever’s happened, happened. You understand what I mean? She won’t look at it as well. You tried to make a better life, you tried to do this. Yeah, you bullshitted her here and there because you wanted to try and do that. Your intention was always to try and do something and it blew up in your face. But when the shit hit the fan, they’re attitude is, oh nah I thought totally different, givin’ her this and that. ‘Oh you’re the best George’ You don’t need those sort of people mate. That’s the sort of person she is. And you need to understand that.
V: I’m fucked mate.
T:And the problem is, you’re connected with Dimi with her with a baby. Otherwise, better fucking getting a fucking toufeki with her.
V: I’m fucked mate.
42In other respects, Mr Theonas’ evidence was unconvincing. On occasions, Mr Theonas appeared to completely lose track of where his thoughts were taking him. Examples include the following:
a.Mr Duggan asked him why he had not, before that morning, produced copies of SMS messages between himself and Mr Vrettakos to his lawyers. Mr Theonas replied: “Because I didn’t think – it was – you know, there is so much information – meetings, times, convoluted conversations with Vrettakos – my head is filled. I operate on intentions and, you know, as best I can, paperwork. But I don’t fathom someone’s going to try and – I’ll tell you why: because I cannot fathom two people putting a case – it’s like I’ve got a – it’s been – anyway, I don’t know. I can’t answer that question, sir”;
b.Mr Duggan asked Mr Theonas whether he had offered money to Mr Vrettakos when Mr Vrettakos sought an extension of the time to settle the purchase of the Beaumaris property. As part of his answer to that question, Mr Theonas said, “George Vrettakos had an incredible was of communicating. I can't explain it. It's just I - that's what's been frustrating, trying to sit here and - it's just an incredible way of communicating all along with these - the whole situation. I asked him to - he and Dimi knew what our arrangement was. Signed documents was - the best intentions - for whatever the reason, George Vrettakos and Dimi, with their own business and he with his sway of deals, including some that I did with him, basically took it upon themselves that everything will be fine and it'll be all worked out because Croydon is going to be sold anyway. It was like - I feel like it's - everywhere I've turned on this case, everything, there's something, something, something, something. I can't explain it. In answer to your question, I did not threaten or put pressure, other than tell him to do the right thing. So in that sense, yeah, I put pressure on because I had guaranteed and taken responsibility to pay that deposit to Maria Sinopoli. Now, we can sit here and say there's agreements and we can sit here and wrangle out of it and that one doesn't count and this one's bull and we can get all the law, but the fact of the matter is, I gave her a guarantee and I gave my word”.
43Mrs Maria Sinopoli: Mrs Sinopoli is an associate in the Fund Services section of Goldman Sachs Asset Management Australia Pty Ltd and a person with experience of financial matters. She has known Mr Theonas for 15 years. She and her husband had intended to purchase the Beaumaris property in 2009 together with Mr Theonas. At the last minute, Mr Theonas withdrew as a purchaser, but agreed with the Sinopolis to pay the interest only mortgage payments and other outgoings until the property was sold.
44The Beaumaris property had been on the market for over 12 months before Mr Theonas told her in early September 2010 that Mr and Mrs Vrettakos wished to purchase the property for the asking price of $1.2m. He said that Mr and Mrs Vrettakos wanted “conditions”; they wanted a long settlement date and they wanted to move in rent free in the meantime. Mrs Sinopoli said that because of these conditions, she wished to speak personally with Mr and Mrs Vrettakos.
45Ms Sinopoli met Mr Theonas at a restaurant. Mr Theonas phoned Mr Vrettakos on his mobile phone. He put Mr Vrettakos on speaker phone and Ms Selemidis participated in the discussion. Mr Theonas and Ms Sinopoli said that this conversation occurred prior to Mr Vrettakos and Ms Selemidis inspecting the property, although it was after they had carried out a “drive-by” and had inspected photographs of the inside of the unit on the internet. Mr Vrettakos and Ms Selemidis denied that they had ever spoken with Mrs Sinopoli.
46During her evidence, Mr Duggan asked Mrs Sinopoli, “What did they say to you about purchasing Beach Road?” She responded, “Well, we started talking about Beach Road, I wanted 1.2 million, they stated that they wanted to move in – they need to move in as soon as possible and they mentioned that they were going to – they wanted to move in rent-free and I said, ‘Well, George mentioned that as well’ I said, ‘And that’s fine’ I said ‘George also mentioned that he’s discussed with you the 200,000 deposit rather than the 10 per cent deposit’ and I said to him ‘Given that you’re moving in rent-free I’m gunna lose out on any rental and the interest that’s coming in that I have to pay and so forth’ I said ‘We’ll leave it at 200,000’ I said ‘But I need a $400 deposit so that that ensures you’re gunna go ahead with the property sale, the purchase of that property.’ They said that was fine, everything was fine at that point. Then I said ‘ Okay, well, the 200,000’ - they mentioned to me that they didn’t have that to give to me and I said, ‘All right. Well, do you propose on giving the 200,000?’ and that’s when they said, ‘Oh’ – they said something along the lines they had an agreement with George that came to fruition in 28 or 20 February, right, and that that $200,000 was going to be the remainder of the deposit. So I looked at George, George nodded his head. I said, ‘Okay. Well, if that contract or agreement you have with George comes to fruition on 28 Feb, then you can pay me the 200,000 then, but the 400 has to come now.’ They agreed and that was the end of it.”
47Later, I asked Mrs Sinopoli about her evidence that she had only “needed $400 actually paid in cash to ensure that they [Mr and Mrs Vrettakos] would go ahead”. I said to Mrs Sinopoli that, “I’m having some difficulty understanding this arrangement where you agree to tenants who are paying $750 a week leaving the property or being required to vacate and you agreeing to permit potential purchasers who sign a document and only pay $400…What was it that you were told by Mr Theonas that gave you – or were you told anything by him that gave you some assurance that this was a reasonable proposition?”
48Mrs Sinopoli agreed that her position with Goldman Sachs gave her some financial acumen and that she was aware that the usual deposit for property purchases was 10 per cent of the purchase price and that ordinarily the full deposit was actually required to be paid. Mrs Sinopoli said in answer to my further question, “What was the security that you were given?” as, “The deposit that was supposedly the security for this deal to go ahead was $400 of a total contract [price] of $1.2 million”. Mrs Sinopoli said that the $200,000 she was promised at the end of February 2011 was “the security” and that Mr Theonas had “never reneged on any of the other amounts” he had given me in relation to the arrangement by which he agreed to meet the interest payments on the Sinopoli’s mortgage and other outgoings. Mrs Sinopoli said, “so why would I doubt that he was going to give me the 200,000 when the Vrettakoses actually said that they had the $200,000 agreement with George?” I am as puzzled by Mrs Sinopoli’s answers now as I was when I asked her about her evidence. In my view, her evidence concerning the transaction was not credible.
49Dr Con Perkoulidis: I have already commented on the evidence about the “deals” in which Dr Perkoulidis participated with Mr Vrettakos and Mr Theonas. Dr Perkoulidis suggested that the expectation of a $1 million return on an advance of $100,000 after two to four weeks, had resulted in cheques being given to Dr Perkoulidis by Mr Vrettakos, as follows:
a.a cheque for $4.25 million dated 17 July 2013 drawn on the account of Dimitra Selemidis, which was dishonoured when presented on 12 June 2015;
b.a counter cheque for $4.25 million dated 23 August 2013 drawn on the account of Consolidated Partners Pty Ltd, which was dishonoured when presented on 27 August 2013.
50No coherent explanation was given for these cheques. Dr Perkoulidis seemed to adopt Mr Vrettakos’ explanation that the $4.25 million was intended as a “gift” from Mr Vrettakos to Dr Perkoulidis. Dr Perkoulidis’ agreed that the cheque dated 23 August 2013 was a “replacement” for the earlier cheque. He was not able to satisfactorily explain why he had presented the earlier cheque in June 2015 and then sued Ms Selemidis in the Supreme Court after it was dishonoured.
51Dr Perkoulidis and his wife visited Mr and Mrs Vrettakos at the Beaumaris unit on Christmas Eve 2010. An issue at the trial had been whether, at this occasion, Ms Selemidis had been proudly showing off her new home to the visitors or whether she only socialised for a short time as she was very concerned about the health of her daughter.
52At the start of his cross-examination, Mr Foster asked Dr Perkoulidis about the condition of Ms Selemidis’ baby daughter. To the proposition that, “On that evening, Anastasia was quite unwell wasn’t she?” Dr Perkoulidis responded, “I don’t know … I didn’t examine her”. He then said that Ms Selemidis “never requested [he] examine her”.
53Upon further questioning, Dr Perkloulidis said that he and his wife “were taken into the bedroom where the child was” by Ms Selemidis. She showed Dr Perkoulidis her daughter and indicated “there was something wrong with her head”. Dr Perkoulidis said that he told Ms Selemidis that there was “nothing wrong”, and that the baby’s head was “normal. That's a normal fontanel that all babies have".
54Dr Perkoulidis said he disagreed that Ms Selemidis “spent perhaps no more than 10 to 15 minutes socialising” although Ms Selemidis was “going in and out of the [child’s] bedroom”. That Ms Selemidis had been concerned that night about her daughter seems to be confirmed by the email sent by Ms Selemidis to Dr Perkoulidis’ wife a few days later which reads as follows: "Hi, beautiful. Just wanted to say that the baby received all clear from the paediatrician. Thanks again for caring so much, Christmas eve”.
55Mr Samuel Sleigh: Samuel Sleigh is a legal practitioner. He was the lawyer supposedly acting for Mr and Mrs Vrettakos in relation to the purchase of the Beaumaris property. Mr Sleigh said that he had not met Mr and Mrs Vrettakos until he attended court to give evidence and had no recollection of having spoken to them earlier. He had no file notes of any conversations with them in 2010 or 2011.
56Mr Sleigh said that Mr and Mrs Vrettakos had been referred to him as clients by Mr Galea, a conveyancer of Principle Conveyancing Services, who was acting for the vendors Mr and Mrs Sinopoli. Mr Sleight wrote to Mr and Mrs Vrettakos on 24 November 2010 in regard to the “purchase from Raffaele Sinopoli & Maria Carmen Sinopoli” of “4/4 Beach Road Beaumaris”. The letter commenced, “We refer to the above matter and wish to thank you for your instructions to act on your behalf”.
57In the attached “tax invoice”, which appeared to be an estimate of costs, the list of items included, in the lump sum figure of $800 plus GST and disbursements, the item “attending client and taking formal instructions”. Mr Sleigh admitted that this had not happened.
58A letter to Mr and Mrs Vrettakos dated 6 May 2011, noted that no response had been received to the letter dated 24 November 2010 and continued, ‘Accordingly we assume that you do not wish for us to act on your behalf”. In the meantime, Principle Conveyancing Services had sent a letter enclosing the contract of sale, vendor’s statement and receipt for $400 for part payment of the deposit. Facsimiles were also sent by Principle Conveyancing Services to Mr Sleigh on 28 February and 28 March 2011 in relation to the deposit.
59On 31 May 2011, Mr Theonas sent an email to Mr Vrettakos, copied to both Mr Galea and Mr Sleigh, commencing, “Hi mate, Please send an email to your lawyer agreeing to the following as discussed with you and me after discussions I had with Maria Sinopoli”. The email required Mr Vrettakos to pay $6,500 to Mrs Sinopoli to obtain an extension of the settlement of the Beaumaris contract and “in order to avoid a rescission notice on this coming Monday”. The email continued, “Your lawyers details are Samuel Sleigh...” and the email address and phone numbers of Mr Sleigh’s firm followed.
60Mr Martin Galea: Martin Galea of Principle Conveyancing Services was “informed by Mr Theonas that the [Beaumaris] property was sold”. Mr Galea had acted previously for Mr Theonas and had purchased a property with him. Mr Theonas asked Mr Galea if he could act for the purchasers as well. When Mr Galea said that he couldn’t, Mr Theonas asked him “whether I could recommend anyone”. Mr Galea recommended Mr Sleigh and he phoned Mr Sleigh to tell him that “he may be getting instructions to act of the purchaser”.
61Mr Bill Velos: Mr Velos acted as Ms Selemidis’ lawyer to advise her upon the execution of documentation in relation to the loan facility she obtained from CCI in May 2010. He may have spoken to Ms Selemidis on 25 May 2010 when he was instructed to act. Apart from that conversation, the only time he had spoken with Ms Selemidis was on 31 May 2010 when he took her through a bundle of documents CCI required to be executed before they would advance to her the sum of $275,000.
62One of the documents required to be completed was a “Reference from an Acceptable Referee”; an “identification record for a signatory to an account” which was required to be completed by the Financial Transactions Report Act 1988 (Cth). The form noted that it “must be signed by an acceptable referee”. The reverse side of the form included a list of 36 “categories of acceptable referees”.
63The form was completed by Mr Velos. On the form, the “name of acceptable referee” was stated to be “Bill Velos, Solicitor”. Under the heading “Part D: Statement of acceptable referee”, the first two questions were as follows:
“11. I have known the signatory [named on the form as Dimitra Vrettakos] for a period of (minimum 12 months):
12.The signatory has been commonly known to me by the name shown in Part A for a period of:”
64Beside each question was a box in which Mr Velos had written “12”. In fact, Mr Velos had only met Ms Selemidis for the first time that day, although he may have spoken to her a few days earlier. Ms Selemidis had married Mr Vrettakos and taken his name, on 1 November 2009. At the foot of the form, Mr Velos had Ms Selemidis sign the document under the heading “signature of the acceptable referee”. Mr Velos said that this was a “mistake”, although Mr Velos said he had been familiar with the form.
65In cross-examination, Mr Velos was asked about writing of the figure “12” beside questions 11 and 12 and admitted that they were in his handwriting. He was then asked, “That’s false, isn’t it?” to which he responded, “When you say it’s false, I didn’t certify that document at all”.
66The hearing was adjourned and Mr Velos was encouraged to seek legal advice in relation to the question. Eventually, he objected to answering the question on the grounds that it may expose him to criminal prosecution under Australian law. He was not prepared to voluntarily answer the question. I required him to do so but made an order pursuant to s.128 of the Evidence Act 2008 (Vic) granting a certificate in respect of “the evidence of Mr Bill Velos, whether previously given or not, in relation to the issue being the completion and execution of the reference required to be completed on 31 May 2010 as part of the documentation required by the financier of the plaintiff’s loan”.
67When the cross-examination resumed, Mr Foster repeated his earlier question in relation to the answers to questions 11 and 12, “That’s false isn’t it?” Mr Velos responded, “It is, Your Honour, it’s false. It’s incorrect”. Mr Velos also conceded that it was “wrong to have your client, Ms Selemidis, sign a document which is known by you to be false”. He admitted that in fact he, as the “acceptable referee” should have signed the relevant part of the form.
68A separate issue of significance raised in cross-examination was whether Mr Velos knew that Mr Theonas was to obtain a substantial part of the $275,000 borrowed by Ms Selemidis from CCI. Mr Velos said that, “The first time I became aware of this separate loan agreement [by which “money was being lent by Ms Selemidis to either Malvern and Williams Road or Mr Theonas”] was when a copy was provided to me with the letter from Alpass and Associates [Ms Selemidis’ lawyers] dated 20 September 2013”.
69Mr Velos also said that he became aware “that there was some kind of a loan agreement” when “George Vrettakos came in and swore that statutory declaration” on 5 July 2011. Mr Velos was asked by Mr Foster about his knowledge of “any loan arrangement” between Ms Selemidis and Mr Theonas. He said that prior to 5 July 2011, he had “no knowledge” of any loan arrangement.
70Mr Velos gave evidence that on 31 May 2010, he was given a document which is headed, “Directional Payment Authority” and which reads, “Re: property at Unit 1 26-28 Patricks Ave Croydon Nth. Dimitra Vrettakos. To whom it may concern. Please disburse $199,175 from the loan funds to George Theonas”. The document is signed by “Dimitra Vrettakos” and, below her signature, Mr Velos wrote the date “31/5/10”.
71There is also in evidence a document headed “disbursement authority” signed by Mr Theonas. The document reads, “Re loan between Malvern Williams Road P/L and Dimitra Vrettakos. Loan Amount $230,000 cr. Prepaid interest $24,725 dr. Fees $4,600 dr. Fees $1,500 dr. Balance $199,175. I hereby authorise you to direct this payment to George Theonas”.
72Mr Velos was asked, “you received that disbursement authority directly from Mr George Theonas, didn’t you?” He answered, “I believe that’s correct, yes”. Later Mr Velos examined his file and said that there was no copy of the disbursement authority signed by Mr Theonas on the file. He said, “I don’t think I’ve ever seen this one”.
73On 1 June 2010, Mr Velos received an email from Mr Theonas as follows:
“hi bill, please disburse funds for me from above settlement in the following matter
20,000 Leo Radiotis
20,000
15,000 fuesco power p/l
????? to you re our loan on 50k
20,000 oloplane p/l t/a the brass tavern
balance of monies to melbourne business construction group p/l”
74By letter from Mr Velos to Ms Selemidis dated 3 June 2010 (though likely sent after 4 June 2010 because of the attachments) reference was made to the disbursement of the “$266,643.90 [of the $275,000 from CCI] which was paid into the Velos Trust Account”. This included $199,175 paid to “George Theonas and/or nominated parties by George Theonas as per Direction Payment Authority (copy attached)”. The attachment was likely to be the document signed by Ms Selemidis and dated 31 May 2010.
75The documents attached to the letter dated 3 June 2010 showed that the following payments had been made at Mr Theonas’ direction:
Laradiotis Family Trust $20,000
Fuesco Power Pty Ltd $15,000
Oloplane Pty Ltd t/a The Brass Tavern $20,000
Southage Pty Ltd $54,000
M & J Galea $10,000
Melbourne Business Construction Group P/L $80,175 $199,175
76Mr Velos said he made these payments after receiving the email from Mr Theonas dated 1 June 2010, and the authority signed by Ms Selemidis on 31 May 2010. Mr Velos said that Southage Pty Ltd was “a company of ours” [ie Mr Velos and his wife] and $54,000 was the balance of a loan owing by Mr Theonas. It was one of a number of loans provided to Mr Theonas over the many years he had been a client of Mr Velos. Mr Velos said that, before Mr Theonas’ email on 1 June 2010, he had no knowledge that Mr Theonas was going to repay the loan to Southage Pty Ltd.
77When asked whether it was “still your evidence that at no time did it ever come up between you [Mr Velos and Mr Theonas] as to any loan arrangement between him and Ms Selemidis?” Mr Velos responded, “Nobody informed me that there was on-lending of the money that I was obtaining for Ms Selemidis”.
78Mr Velos said that he knew that Ms Selemidis was intending to use the $275,000 from CCI to purchase a “commercial property”. He was told this by Ms Selemidis (or Mr Vrettakos) in a telephone conversation on 25 May 2010. Mr Velos said that he knew that Mr Theonas “was in property development”. He said that “it could be” that Ms Selemidis and her husband “were purchasing a property from him or some property activity was happening and there was [an] arrangement between them”.
79Mr Velos said, “I don’t specifically go behind transactions that clients are doing, I go upon what my clients instruct me and tell me is the purpose of the loan”. Mr Velos agreed that “there must be a purchase of property from Mr Theonas” or his interests “because often he arranges consortiums that develop properties”. Mr Velos said that the fact that Mr Theonas “referred Ms Selemidis and Mr Vrettakos to me was the thing that instigated that loan” [the loan by Ms Selemidis from CCI].
80Mr Velos also gave evidence about the circumstances in which he prepared the statutory declaration which Mr Vrettakos signed on 5 July 2011. Mr Velos first saw both Mr Vrettakos and Mr Theonas together. He said that instructions were given by “a combination of both George Theonas and George Vrettakos but principally George Vrettakos. [He] was adamant he wanted the statutory declaration to be done to clear the air, because memories fade, to have the truth as to the circumstances surrounding events put in the document”. It was, however, Mr Velos’ suggestion that there be a statutory declaration.
81Mr Velos took two to three pages of notes at the first meeting. Because the matter was only a small one Mr Velos said it was he likely did not open a specific file although he would ordinarily keep all documents on his “general file”. Mr Velos had searched for the notes from the first meeting but said, “I can’t locate them on the general file”. Mr Velos said that some days after the first meeting, Mr Vrettakos again attended, read through the draft statutory declaration Mr Velos had prepared, made certain amendments and signed the document.
Loan by Ms Selemidis to Mr Theonas on about 30 May 2010
82In February 2010, Mr Vrettakos was dismissed from his employment as a lending manager with the Commonwealth Bank and accused of inappropriate dealings resulting in losses of at least $3 million. Mr Vrettakos became involved in a series of business deals with Mr Theonas which involved them spending considerable time together, including lengthy trips overseas. Mr Vrettakos had little money of his own and said that he became financially dependent on Mr Theonas. Ms Selemidis owned a residential property at Croydon, which she had acquired in a property settlement at the conclusion of her first marriage;
83Ms Selemidis brings her action against Mr Theonas for $185,500 plus interest based on the guarantee by him of the written loan agreement between Ms Selemidis, Malvern Road and Mr Theonas dated 30 May 2010. Ms Selemidis loaned Malvern Road the sum of $230,000 repayable on 28 February 2011 with interest of 21.5 per cent per annum, six months of which was pre-paid.
84It is agreed that Mr Theonas made the following payments:
29 October 2010 $20,000
1 December 2010 $8,500
12 December 2010 $8,500
15 April 2011 $1,000
June 2011 $6,500 $44,500
85To finance the loan to Mr Theonas, Ms Selemidis borrowed $275,000 from CCI upon the security of her Croydon property. From this sum, $199,175 was disbursed to third parties at the request of Mr Theonas and for his benefit. After deduction of a further small sum, $58,222.54 was available to Ms Selemidis and is likely to have been appropriated by Mr Vrettakos for the liabilities of the family and for Mr Vrettakos’ ventures.
86Ms Selemidis said in evidence that she did not receive proper independent legal advice in relation to this transaction. When Mr Theonas had earlier suggested she use her unencumbered Croydon property as a source of funds to invest, she was wary. She said her husband Mr Vrettakos had “manipulated” her into agreeing to raise money to lend Mr Theonas because Mr Theonas was in need of “fast cash”.
87Ms Selemidis said that she has not previously known the solicitor, Mr Bill Velos. Her husband told her that Mr Velos was “one of the best lawyers” in Melbourne and Mr Vrettakos had been receiving legal advice from him in relation to his problems with the Commonwealth Bank. This was at the suggestion of Mr Theonas. Mr Velos had acted for Mr Theonas “a number of times” and Mr Theonas had known Mr Velos for over 10 years.
88The sequence of events surrounding the execution of the $230,000 loan agreement between Ms Selemidis, Malvern Road and Mr Theonas is unclear. Ms Selemidis said that she “hadn’t seen the loan agreement until I went into Velos’ office”. The consultation with Mr Velos was on Monday 31 May 2010. However, a loan agreement for $250,000 executed by Ms Selemidis, Malvern Road and Mr Theonas is dated 28 May 2010.
89On Sunday 30 May 2010, Mr Theonas sent an email to Mr Vrettakos, which reads in part as follows, “Bill Velos called me on Friday re your loan [the loan to Ms Selemidis from CCI]. You and Dimi need to come into the office on Monday 10am to sign docs so settlement can occur Tuesday. Let’s meet 15 mins earlier across the road to go over this meeting with Velos. Then let’s meet also after the meeting. I want to talk to Dimi to make sure she’s ok re the family issues…Re the loan between Dimi and Malvern / Williams Road, loan amount will change from 250,000 to 230,000…I will go over this tomorrow before Velos meeting with you both…I will have the updated loan document showing the change of loan from 250,000 to 230,000”.
90The loan agreement for $230,000 is dated 30 May 2010 and is executed by Malvern Road and Mr Theonas. The document is not signed by Ms Selemidis, although she insisted in evidence, probably mistakenly, that she had signed a copy.
91Mr Velos was aware at least by 31 May 2010 that the money from CCI was to be disbursed, as to $199,175, in favour of Mr Theonas’ interests. Mr Theonas’ email to Mr Vrettakos dated 30 May 2010 noted that of the loan agreement amount of $230,000 to Malvern Road, “net payment will be 199,175 disbursed to Velos Lawyers” and asked that, presumably Ms Selemidis, “please make a disbursement authority in favour of Velos trust account in favour Malvern and Williams Road”.
92Mr Theonas also signed a “disbursement authority,” headed “re: loan bw [between] Malvern Williams Rd P/L and Dimitra Vrettakos”, directing the payment of $199,175 “to George Theonas” out of the loan amount of $230,000 from the loan between Malvern Road and Ms Selemidis. The directional payment authority signed by Ms Selemidis and dated 31 May 2010 was attached to a letter dated 3 June 2010 from Velos Lawyers to Ms Selemidis detailing how the $275,000 obtained from CCI had been accounted for.
93Mr Velos completed a “solicitor’s certificate” in relation to the CCI loan to Ms Selemidis and the mortgage securing the loan. The certificate noted that Mr Velos had:
a.“explained to the borrower, before the borrower signed the documents, the general nature and effect of the documents required to be signed by the borrower including the risk of loss of any security and other assets owned by the borrower”;
b.“informed the borrower in very clear terms that I was not expressing any opinion nor advising on the viability of the transaction and the borrower’s ability to make the required payments to you”;
c.“further informed the borrower that if in any doubt on those aspects, the borrower should obtain independent financial advice before signing the documents”.
94The certificate noted that Ms Selemidis “stated” to Mr Velos that:
a.“she understood the general nature and effect of the documents” [the CCI loan document and mortgage]” and it appeared to Mr Velos that she “did have such understanding”;
b.“she was signing these documents freely, voluntarily and without pressure from any other person”.
95Ms Selemidis signed the “client’s certificate” at the end of the document. She said, however, that she “blindly” signed the documents at Mr Velos’ office. The discussion with Mr Velos was “all about her baby” and other social matters and there was “nothing” about the mortgage. Ms Selemidis said that she asked Mr Velos whether she “needed to worry about anything” to which Mr Velos responded, “How many personal guarantees do you need?” Mr Velos was not asked about this statement in his evidence.
96Ms Selemidis said that at the time of the meeting she was “heavily pregnant with low back pain and shortness of breath”. She said she “did not read the documents before signing them”. Ms Selemidis said that Mr Theonas was at the meeting in Mr Velos’ office and that she had signed the $230,000 loan document with Malvern Road at that time, although she signed the agreement without reading it.
97Mr Velos gave evidence that he conscientiously carried out his duties as described in the certificate, that he was unaware that Ms Selemidis was borrowing money from CCI so that Mr Theonas (through Malvern Road) could borrow money from her and that Mr Theonas was not present at the meeting. Much of this evidence has relevance only as to matters of credit. There is no dispute between the parties that by the written agreement dated 30 May 2010, Ms Selemidis lent $230,000 to Malvern Road and that Mr Theonas guaranteed the obligations of Malvern Road under the agreement.
98By his defence in the proceeding, Mr Theonas denied that Ms Selemidis borrowed money from CCI for the purpose of advancing funds to Malvern Road and that “no money was advanced” pursuant to the loan agreement with Malvern Road, “to the Company [or] to him personally”.
99Nevertheless, the terms of Mr Theonas’ email dated 30 May 2010 to Mr Vrettakos, the “disbursement authority” he signed and the admission he made in his evidence that $199,175 was disbursed by Mr Velos upon his instructions makes it clear that there was no substance to these denials.
100Ms Selemidis sues upon the guarantee in the loan agreement with Malvern Road dated 30 May 2010. Ms Selemidis’ complains that she was “manipulated” into making the loan because Mr Theonas’ “need of fast cash”. However, the circumstances of the execution of the document dated 30 May 2010 and whether she herself signed the agreement are of little consequence in determining the obligations of Mr Theonas pursuant to the guarantee he signed.
101These issues may, however, have relevance to the determination of other matters raised in the pleadings, and particularly as they affect the credibility of the witnesses’ accounts of later events. This includes the accuracy of Ms Selemidis’ recollection, the veracity of Mr Velos’ certificate and the general credibility of Mr Theonas and Mr Vrettakos.
102I am satisfied on the evidence that:
a.Ms Selemidis was prepared to lend to Malvern Road the bulk of the money advanced by CCI;
b.she was probably influenced by both Mr Theonas’ request for funds and her husband’s need for the more modest sum which was retained after the disbursements for Mr Theonas;
c.the terms of the loan to Mr Theonas did not seem inappropriate or unfair, particularly as the advance was personally guaranteed by Mr Theonas;
d.when she executed the loan documentation from CCI on 31 May 2010, Ms Selemidis had already signed the earlier version of the loan agreement with Malvern Road (for $250,000) and was aware of the revised amount of $230,000;
e.Ms Selemidis knew that the loan to Malvern Road was an interest only loan, that six months interest had been paid in advance, that the principal was repayable on her next birthday, 28 February 2011 and that Mr Theonas personally guaranteed the obligations of Malvern Road under the loan agreement;
f.It seems improbable that Mr Theonas had not at some stage before 31 May 2010 informed Mr Velos that Ms Selemidis’ loan from CCI was primarily for Mr Theonas’ benefit.
103It is agreed between the parties that Mr Theonas made five payments totalling $44,500 to Ms Selemidis between 29 October 2010 and June 2011. The reason for these payments was unexplained, including the first payment of $20,000 on 29 October 2010.
104Under the loan agreement, the first six months interest was paid in advance. It seems that, unless otherwise agreed, interest accruing on the loan amount was to be paid “on the maturity date” of 28 February 2011.
Purchase of the Beaumaris Property
105In early September 2010, as a result of the pressure on Mr Vrettakos by the Commonwealth Bank, he and Ms Selemidis were required to vacate their home in Doncaster. Mr Vrettakos’ sister was living in Ms Selemidis’ Croydon property. Mr Theonas introduced Ms Selemidis and Mr Vrettakos to the Beaumaris property.
106On about 11 September 2010, Ms Selemidis and Mr Vrettakos signed a contract of sale for the purchase of the Beaumaris property. There is considerable dispute about the circumstances in which the document was signed and the effect of the execution of the document by the “purchasers”.
107In the statement of claim, there is one version of events. In their oral evidence, Ms Selemidis’ and Mr Vrettakos’ version varied in some material respects. Essentially, however, they said that:
a.Mr Theonas told them he was effectively the owner of the property;
b.he required the contract of sale signed because he needed to placate Mr and Mrs Sinopoli, whose name was on the title as owners and who wanted the property sold;
c.the contract was not intended to bind Ms Selemidis and Mr Vrettakos to purchase the property unless they wanted to and, at the relevant time, they had the financial capacity to do so.
108The statement of claim pleads that:
a.Ms Selemidis and Mr Vrettakos “agreed to purchase” the property “by contract of sale” dated 12 September 2010.
b.they “signed the contract of sale” as a result of representations by Mr Theonas that he was the “true owner” of the property and that the purchasers “would be released from the contract” if they “did not want to complete the purchase”.
c.the contract of sale “secured to the defendant a substantial benefit [and was] a grossly improvident transaction on the part of the plaintiff”.
109By his defence, Mr Theonas relied upon Ms Selemidis execution of the contract of sale, the terms of the document and the fact that he “was a stranger to that sale document” and, as a result, Ms Selemidis must have understood that he would “have been powerless to enforce, waive or vary any part of the contract of sale”.
110I have already referred to the inconsistencies in the recollection of Ms Selemidis and Mr Vrettakos in relation to the execution of the contract and the details which had been completed before they signed the document.
111I have also noted the unusual features of the transaction and the preparedness of Mrs Sinopoli to embrace terms which offered her little protection, including:
a.a deposit of almost 20% of the sale price;
b.the requirement that, apart from an immediate payment of $400, the balance of deposit would not be payable for almost 6 months;
c.that Mr Theonas would accept responsibility for the payment of the $200,000 balance of deposit because he owed money to Ms Selemidis;
d.that the purchasers were to be immediately allowed into occupation of the property “rent free”;
e.that the purchasers had not inspected the property at the time these terms were agreed.
112The critical aspect of this arrangement, from the viewpoint of Mr Theonas, was the asserted agreement of all parties that the balance of the deposit of $200,000 would be a “contra” against the sum of $230,000 which had been advanced to Malvern Road, and guaranteed by Mr Theonas.
113The evidence, in my view, supports the following conclusions:
a.Ms Selemidis and Mr Vrettakos knew that the Beaumaris property was on the market;
b.Ms Selemidis and Mr Vrettakos signed a contract of sale as purchasers. At that time, they knew that the vendors were Mr and Mrs Sinopoli and that the purchase price was $1.2 million;
c.at the time, they needed somewhere to live. It is likely that Mr Theonas knew that neither Ms Selemidis or Mr Vrettakos had any ready money, particularly in the aftermath of Mr Vrettakos’ problems with the Commonwealth Bank and the likely forced sale of the Vrettakos’ Doncaster property;
d.it is possible that both Mr Vrettakos and Mr Theonas hoped that one of Mr Vrettakos’ “projects” might come to a successful conclusion before the balance of purchase money was due to be paid or, as Mr Theonas suggested, Ms Selemidis might sell her Croydon property after February 2011, in time for settlement of the Beaumaris property in May 2011;
e.it is likely that Mr Theonas, rather than the Sinopolis, was the “real”, or at least a substantial, beneficial owner of the property as all the financial commitments in relation to the property were being met by Mr Theonas, pursuant to the “loan agreement” with Mr and Mrs Sinopoli dated 1 March 2009;
f.whilst it is likely the Sinopolis wanted the property sold and their mortgage repaid, it seems that so long as Mr Theonas considered the terms of sale satisfactory, Mr and Mrs Sinopoli would go along with it;
g.the circumstances in which the parties reached agreement and the contract of sale was signed, is difficult to disentangle. The version involving the “speaker-phone conversation” from the restaurant seems improbable;
h.the contract of sale provided for a deposit of $200,400 of which only $400 was actually to be paid before Ms Selemidis and Mr Vrettakos were permitted to go into possession of the property without any obligation to pay rent;
i.the balance of deposit of $200,000 was to be paid on 28 February 2011, the same date that Malvern Road was to repay about $200,000 to Ms Selemidis;
j.Ms Theonas, through Mr Galea, arranged for the solicitor, Mr Sleigh to act for Ms Selemidis and Mr Vrettakos on the conveyance. There was little, if any, direct contact between the solicitor and his supposed clients;
k.It seems that a copy of the contract of sale may not have been given directly to the purchasers. It is not clear whether, at the time, Ms Selemidis had seen a completed copy of the contract. It is likely that she knew that only part of the deposit ($400) had been paid and that the probable source of that sum was Mr Theonas;
l.Ms Selemidis and Mr Vrettakos signed a Section 27 Statement, apparently on 16 September 2010, although the circumstances in which it was signed, and whether the “purchasers” attached any significance to the part headed “Release of the deposit by the purchaser(s)”, is unclear;
114The critical aspects of the contract for the purchase of the Beaumaris property are:
a.whether Ms Selemidis and Mr Vrettakos “bound” themselves to purchase the property;
b.whether they were aware of the arrangement by which the balance of deposit of $200,000 would be paid on 28 February 2011.
115In her statement of claim, Ms Selemidis alleges that she entered the contract of sale as a result of two representations made by Mr Theonas:
a.that he was the owner of the Beaumaris property;
b.that if Ms Selemidis did not want to complete the purchase, she (and presumably Mr Vrettakos) would be released from the contract of sale.
116However, the allegations of representations appear to go nowhere. The provisions of the Australian Consumer Law are not pleaded and no specific relief is sought in the statement of claim. It seems, therefore, that the matters referred to are simply relied upon as part of the factual matrix.
117Paragraph 11 of the statement of claim specifically pleads that, “it was an express term of the contract of sale that the price was payable by a deposit of $200,400 by 28 February 2011 (of which $400 had been paid) and by a final payment of $999,600 on 11 May 2011”. This paragraph was admitted by Mr Theonas.
Amendment to agreement dated 12 September 2010
118It was the “contra” arrangement in relation to the $200,000 balance of deposit which was said by Mr Theonas and Mrs Sinopoli to have been agreed in the “speaker-phone” conversation in early September 2010, and evidenced by the later Amendment to agreement signed by Ms Selemidis.
119The “Amendment to agreement dated 12/9/2010” signed by Mr Theonas and Ms Selemidis and witnessed by Mr Vrettakos was similar in its terms to the “Deed of agreement” dated 20 September 2010 executed by Mr Theonas and Mr and Mrs Sinopoli.
120The “Amendment to agreement” reads as follows:
“It is hereby agreed that Dimitra Vrettakos will authorise George Theonas to pay 200,000 from monies lent on the above agreement (copy attached) to Maria Sinopoli (or her nominated party) on the 28th February 2011 and that these funds will form the balance of deposit due on the purchase of property situated at unit 4/4 Beach Rd Beaumaris which has been purchased by Dimitra and George Vrettakos.
It is also hereby agreed that the balance of monies owing on the above named contract will be paid by George Theonas direct to Dimitra Vrettakos will be 30,000 and that this payment will be made on / before 11 May 2011.
It is agreed that once the above two payments of 30,000 and 200,000 are paid, that will constitute full and final settlement of the above named loaned [sic] agreement between the parties concerned”.
121The “Deed of agreement” reads as follows:
“Pursuant to a Contract of Sale relating to the purchase of 4/4 Beach Road Beaumaris VIC 3193, between Maria & Raffaele Sinopoli (Vendors) signed on 12th September 2010 and George & Dimitra Vrettakos (Purchasers) signed 11th September 2010. It is hereby agreed by Maria & Raffaele Sinopoli with George Theonas that:
1.As per Deed of Agreement dated 1st March 2009 Maria & Raffaele Sinopoli borrowed funds from George Theonas
2.George Theonas guarantees to pay the deposit owing by the above named purchasers, George & Dimitra Vrettakos due on the 28th February 2011 less any amounts owed by Maria & Raffaele Sinopoli to George Theonas”.
122It is appropriate to note that:
a.the amendment to agreement and deed of agreement both anticipated that the balance of deposit of $200,000 would be paid as one lump sum on 28 February 2011;
b.the date, 28 February 2011, for the payment of the balance of deposit, coincided with the date for repayment of the loan by Malvern Road to Ms Selemidis.
123Ms Selemidis alleged in her statement of claim that she “did not sign the document” of alternatively, if she signed the document, “she did so by mistake in circumstances where she had no understanding as to terms and effect of the document and no intention to execute the document as an amendment to the MW loan agreement”. In further and better particulars, it was said that, at the time, Mr Vrettakos “was overseas” and she signed the document “in the mistaken belief that it was a document of a routine character related to the contract of sale”.
124The versions given as to the circumstances in which the Amendment to agreement document was signed are entirely inconsistent. In her evidence, Ms Selemidis gave one version. Mr Theonas gave another, which was disputed as to significant matters by Mr Vrettakos. In the statutory declaration, which Mr Vrettakos said in evidence was false, he had supported Mr Theonas’ version, although with a different emphasis.
125Ms Selemidis said that soon after she and Mr Vrettakos signed the contract of sale, Mr Theonas visited her at home whilst her husband was absent. Although Ms Selemidis maintained she had not signed the Amendment to agreement document, she said it was possible that when Mr Theonas visited her, he obtained her signature to the document whilst keeping the contents of the document concealed from her.
126Ms Selemidis’ evidence in relation to the document was as follows:
a.whilst she said, “I did not sign that document”, it appears that what she was saying was that she could not recall signing the document with knowledge of what it was;
b.her evidence of the alternative scenario was quite specific. She said that Mr Theonas told her, “I forgot to get you to sign a couple of things”, and Mr Theonas “had [the paper] rolled up” so that she could not see its contents. “He just said, ‘
Justsign here’. I’ve got an image of him leaving – he still had it rolled up in his right hand”;c.she also “speculated” that she “may have signed a blank document”.
127Mr Theonas denied Ms Selemidis’ version of events. He said that he sent a copy of the document by email to Mr Vrettakos. Later, he visited the Vrettakos home. Mr Vrettakos told him his wife was upstairs resting. Mr Theonas said Mr Vrettakos took the document upstairs and brought it back signed. Mr Vrettakos then signed the document as a witness.
128Mr Vrettakos said that he could not recall an occasion when Mr Theonas visited and asked him to go upstairs to get his wife to sign a document. He said he could not recall when he signed the document. Mr Vrettakos said the first time he saw it was as a “blank” document (presumably unexpectedly) sent to him by email on Mr Theonas’ wife’s account.
129In the statutory declaration declared by Mr Vrettakos on 5 July 2011, he said that during the period he and his wife were “reviewing” the contract of sale of the Beaumaris property before they executed the document, there were “lengthy discussions” involving his wife, himself and Mr Theonas, after which Ms Selemidis signed “an authority allowing George Theonas to pay $200,000 of the money he owed Dimitra towards the deposit of the property”.
130Mr Theonas said that Mr Vrettakos had given instructions to Mr Velos to prepare the statutory declaration at a meeting which Mr Theonas had “organised” and at which he was also present. At the meeting, Mr Theonas said that Mr Vrettakos gave his story which Mr Velos took down as “bullet points”. Mr Theonas said that, “I also gave some points”. Mr Velos gave similar evidence as Mr Theonas.
131The Amendment to agreement dated 12 September 2010 is a critical document. It is, I am satisfied, signed by Ms Selemidis. It puts in writing what Mr Theonas and Mrs Sinopoli say was agreed in the “speaker-phone conversation” as constituting essential terms for the sale of the Beaumaris property; that Mr Theonas would assume the responsibility for the payment of the balance of deposit of $200,000.
132It is surprising, therefore, that the documents evidencing this crucial element of the transaction were not executed at the same time as the contract of sale. The contract of sale dates the execution by Ms Selemidis and Mr Vrettakos as 11 September 2010 and the execution by Mr and Mrs Sinopoli as 12 September 2010. However, the Amendment to agreement signed by Mr Theonas and Ms Selemidis and witnessed by Mr Vrettakos is dated 12 September 2010, and the corresponding “Deed of Agreement” between Mr Theonas and Mr and Mrs Sinopoli is dated 20 September 2010. I have already noted that the section 27 statement is dated as having been signed by Ms Selemidis and Mr Vrettakos on 16 September 2010.
133In the circumstances, it is difficult to unravel a likely chronology of events or to even speculate as to the circumstances in which Ms Selemidis signed the Amendment to agreement.
134There are two versions; Mr Theonas’ that Mr Vrettakos took the document upstairs where Ms Selemidis apparently signed it, and Ms Selemidis’ attempts to explain the existence of a document not only with, what I am satisfied, is her signature, but also with her husband’s signature as a witness.
135Ms Selemidis was not sure whether it was her signature. It looks like every other signature which is on the documents in evidence, except for a signature purporting to be hers on a cheque payable to Dr Perkoulidis and dated 17 July 2013 for $4.25 million.
136Mistake: Ms Selemidis alleges in her statement of claim that if she signed the Amendment to agreement, “she did so by mistake in circumstances where she had no understanding as to the terms and effect of the document and no intention to execute the document as an amendment to the MW loan agreement”.
137No particulars were given of the “mistake”. From Mr Foster’s final submissions it appears that Ms Selemidis relies upon the principle of “non est factum” rather than any allegation of fraud, particularly given the absence of any particulars of fraud.
138I consider that Ms Selemidis’ reliance upon “mistake” cannot succeed, because the evidence does not allow me to reach a conclusion on the probabilities as to whether a mistake had occurred.
139Ms Selemidis was, or should have been, aware that –
a.The purchase price on the Beaumaris property involved the payment of $200,000 on 28 February 2011;
b.This date was the due date for repayment of the Malvern Road loan;
c.If she and Mr Vrettakos proceded with the purchase, the repayment of the Malvern Road loan would be a source of funds to pay the balance of deposit.
140I do not consider, however, that I can make any determination on the evidence as to whether:
a.the direct payment of the Malvern Road loan repayment to the Sinopolis as the balance of deposit was discussed with Ms Selemidis;
b.Ms Selemidis signed the Amendment to agreement document in circumstances where she was aware of its contents.
141As Ms Selemidis carries the onus in relation to the issue, I consider it has not been made out that the Amendment to agreement was signed by Ms Selemidis by “mistake”.
Undue influence / Unconscionable Conduct
142In a further alternative plea, Ms Selemidis relies upon the circumstances of her relationship with Mr Theonas and of the particular transaction as constituting undue influence or unconscionable conduct, and as a result Mr Theonas should not be allowed to rely upon the “amendment to agreement” to discharge his obligations as guarantor under the loan agreement with Malvern Road.
143Ms Selemidis does not allege that there was an exercise of actual influence by Mr Theonas but rather that their “antecedent relationship” was “such as to raise a presumption that [Mr Theonas] has relevant influence over [Ms Selemidis]” such that the Court should set aside the Amendment to agreement unless Mr Theonas proves that the benefit of the transaction “was a spontaneous act of [Ms Selemidis] in exercise of an independent and informed will” (see Christodoulou v Christodoulou [2009] VSC 583 per Kaye J at paragraph 70).
144The matters relied upon by Ms Selemidis as constituting the necessary “antecedent relationship” are:
a.her advanced state of pregnancy with her first child;
b.the financial difficulties arising from the actions of Mr Vrettakos;
c.the risk of losing the matrimonial home at Doncaster and the need for alternative accommodation;
d.her inability to “make reasonable judgments” evidenced by her psychological condition;
e.her inability to afford to purchase the Beaumaris property and the importance to her of the Croydon property which was the only significant asset she had brought from her first marriage;
f.her reliance on Mr Theonas “in relation to her property and affairs” and the fact that he was a close friend and business associate of her husband;
g.her emotional dependence on Mr Theonas.
145In September 2010, Ms Selemidis was one month from giving birth to her first child. Her husband had lost his job with the Commonwealth Bank and they were being forced to sell their Doncaster home. Mr Theonas took a caring interest in Ms Selemidis. He was clearly a person of “influence” in her life.
146It is difficult, however, to accurately assess precisely what that influence was in the decision making of Ms Selemidis. Mr Vrettakos was her husband. He was associated very closely with Mr Theonas. They apparently had joint projects together. The sale of land at Toolern was a project of Mr Theonas’ that he and Mr Vrettakos were involved in.
147It is not clear whether the projects which took Mr Vrettakos and Mr Theonas overseas together were the initiatives of one or both of them. It is difficult to gauge the authority or influence that Mr Theonas had over Mr Vrettakos or whether he used this as a means of obtaining compliance by Ms Selemidis with his wishes.
148Mr Theonas was very much aware of Mr Vrettakos’ problems with the Commonwealth Bank and, from time to time, he appears to have offered financial support. However there was little real evidence from which to assess the actual financial position of either Mr Theonas or Mr Vrettakos in September 2010, or what was likely to be the position of each of them in the future.
149Ms Selemidis signed the contract of sale relating to the purchaser of the Beaumaris property. The contract of sale was for $1.2 million with $200,000 to be paid as the substantial part of the deposit on 28 February 2011. The contra-arrangement by which Mr Theonas and Mrs Sinopolis said this sum was to be paid is the substance of the Amendment to agreement.
150Without knowing, or being able to determine on the probabilities, what Ms Selemidis knew when she signed the contract of sale, or the circumstances in which she signed the Amendment to agreement, it is difficult to determine what authority or influence Mr Theonas exercised or whether it was improper or inappropriate in the circumstances. Accordingly, I do not consider that Ms Selemidis can rely upon the principles of undue influence in relation to the Amendment to agreement.
151Similarly, I am not satisfied in relation to Ms Selemidis’ reliance upon unconscionability. Ms Selemidis, in September 2010, was certainly at a disadvantage in her ability to make judgments as to what was in her best interests. Her advanced state of pregnancy, her psychiatric illness and the anxiety caused by her husband’s loss of employment and the resulting financial uncertainty, including in relation to their home, were all significant factors.
152As a result of the contract of sale of the Beaumaris property, the contra arrangement to set off the loan repayment against the deposit payment and the ability to move into Beaumaris rent-free (as Mr Theonas suggested was the position), Ms Selemidis would have resolved some of the key destabilising factors in her life at that time. The repayment of the loan to Malvern Road was simply diverted to meet the deposit payment for the house purchase.
153Mr Theonas, in his evidence, expressed the view that Mr Vrettakos had always been confident that his “deals” would ultimately be successful and that he simply needed time to complete the purchase of the Beaumaris property. Mr Theonas considered that it was Ms Selemidis’ distress at her husband’s inability to bring one of his projects to completion so that they could settle the Beaumaris purchase which had caused her to bring the proceeding against him.
154It is not possible from the evidence to determine the circumstances in which Ms Selemidis executed the Amendment to agreement and whether she had a specific awareness of the contra arrangement in relation to the deposit payment of $200,000. Accordingly, I can make no finding as to whether Ms Selemidis’ will was affected by unconscionable conduct on the part of Mr Theonas.
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd
155The parties made extensive submissions as to the effect of the decision Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd, (2004) 219 CLR 165, in relation to the present case. At paragraph 57, the High Court said that, “The general rule, which applies in the present case, is that where there is no suggested vitiating element, and no claim for equitable or statutory relief, a person who signs a document which is known by that person to contain contractual terms, and to affect legal relations, is bound by those terms, and it is immaterial that the person has not read the document”.
156As the Court said, at paragraph 54, “No one suggests that the fact that a document has been signed is for all purposes conclusive as to its legal effect”. Without accepting specific parts of the oral evidence over other parts, I consider that the circumstances of the present case should lead me to the conclusion that, unless she can demonstrate otherwise, Ms Selemidis should be bound by the Amendment to agreement.
157The undisputed facts which I consider relevant are:
a.Ms Selemidis knew that she was signing a contract of sale to purchase the Beaumaris property on 10 September 2010;
b.she knew the names of the vendors and the purchase price. Whilst she said that she was unaware of the terms of the sale in relation to the payment of the deposit and balance of purchase price, there is no proper basis to conclude that the written document (including the terms for payment) should be struck down;
c.the purchasers were permitted to enter into possession rent free upon payment of only $400;
d.the date for the payment of the balance of the deposit ($200,000) coincided with the date for the repayment of the loan ($230,000) to Ms Selemidis by Mr Theonas;
e.the Amendment to agreement provided that Mr Theonas might himself pay the balance of deposit, on the purchasers’ behalf, to Mr and Mrs Sinopoli. Provided that payment was made and a further $30,000 paid, Mr Theonas would have fulfilled Malvern Road’s (and his own) obligations under the loan agreement;
f.Ms Selemidis thought that any document Mr Theonas brought to her for signature on 12 September 2010 may have related to the contract of sale signed two days earlier.
158In relation to the Amendment to agreement, I am satisfied on the evidence that:
a.The document reflects a means by which the substantial part of the deposit was to be met by the purchasers;
b.It is likely that at least Mr Vrettakos understood this, as he was prepared to execute the document as a witness;
c.I am unable to determine whether Ms Selemidis knew that Mr Theonas was to pay the balance of deposit in February 2011, or whether she knowingly signed the Amendment to agreement;
d.That Ms Selemidis might have knowledge of these matters seems inconsistent with her assertion that Mr Theonas was holding himself out as the “true” owner of the Beaumaris property. However, if he was assuming an obligation to make the substantial first payment under the contract, the requirement of a written acknowledgment that the payment (and a further payment of $30,000) was in “full and final settlement” of the loan agreement with Malvern Road, would not be suprising;
e.However, even if it were to be accepted that Ms Selemidis knowingly signed the Amendment to agreement as the formal embodiment of the “contra” arrangement, thereafter, Mr Theonas simply appeared to continue the arrangement he had with Mr and Mrs Sinopoli and did not ever appear to have intended to pay a lump sum balance of deposit of $200,000 in February 2011;
f.The email exchanges in March 2011 with the Sinopoli’s conveyancer, Mr Galea, whilst referring to the proposed agreement involving Mr Theonas and Ms Selemidis, also suggested that the whole of the deposit had been paid by early March 2011 and could be released to the vendor.
159Compliance by Mr Theonas with the Amendment to agreement: The arrangement between Mr Theonas and Mr and Mrs Sinopoli, after he was removed as a purchaser of the property in 2009, was apparently contained in the Deed of Agreement dated 1 March 2009 whereby Mr Theonas agreed to “lend monies to the borrower [Mr and Mrs Sinopoli] to assist with the payment of the property [at Beaumaris] until the property is sold”. The deed provided that, “The loan shall be used for monthly repayments” for the property.
160Mrs Sinopoli said that from 2 April 2009, Mr Theonas paid into her bank account the amounts she told him were required to meet the bank repayments and other outgoings on the property. The only difference, after Ms Selemidis and Mr Vrettakos moved into the Beaumaris property, was that the rental of $750 per week, which had been received from the tenants, was covered by an increased contribution by Mr Theonas.
161On 30 August 2012, Mr Theonas took a short term loan from Mr John Casey so that $80,000 could be transferred to Mr and Mrs Sinopoli to remove a particular property of theirs as part of the security for the bank loan in respect of the Beaumaris property.
162The total of the payments to Mr and Mrs Sinopoli by Mr Theonas between 2 April 2009 and 9 June 2013, when the Beaumaris property was sold, was $285,148. Mrs Sinopoli said that deducting the $200,000 balance of deposit on the sale of the Beaumaris property left $85,148 owing by her and her husband to Mr Theonas. They had not paid that sum as she and Mr Theonas were waiting to see the outcome of the present proceeding.
163Three written communications in late February and early March 2011 suggested that the $200,000 balance of deposit had been paid in a lump sum at about that time. These were:
a.facsimile transmission dated 28 February 2011 from Principle Conveyancing Services to Samuel Sleigh and Associates noting that $200,000 “balance of deposit” was due that day and asking “when the deposit will be provided to our office”;
b.letter dated 10 March 2011 from Principle Conveyancing Services to Mr and Mrs Sinopoli seeking their confirmation that “the deposit money due in the sum of $200,000 by the purchaser is to be released to the benefit of George Theonas”. Mr and Mrs Sinopoli returned the letter signed by them and dated 11 March 2011, agreeing “to the terms as contained in this letter”.
c.facsimile transmission dated 15 March 2011 from Principle Conveyancing Services to Samuel Sleigh and Associates confirming “that the full deposit has now been paid” and “that the deposit has now been released to the vendors”.
164The spreadsheet of payments from Mr Theonas to Mr and Mrs Sinopoli showed that the payments as at 11 September 2010 totalled $61,981 and between that date and 28 February 2011, a further $24,355 had been paid.
165In these circumstances, I have little confidence in the evidence given by Mr Theonas and Mrs Sinopoli of the supposed compliance by Mr Theonas of the requirement in the Amendment to agreement for the payment of the $200,000 balance of deposit. I do not consider that the terms of the Amendment to agreement were fulfilled by him continuing to pay the outgoings on the property after September 2010, and even though the payments increased because the Beaumaris property was no longer occupied by paying tenants. I note that a 60 day notice to vacate was served by registered post on the tenants on 13 September 2010 and they were required to vacate by 18 November 2010.
166Failure to settle the contract of sale: Settlement of the contract of sale was due on 11 May 2011. In an email dated 13 May 2011, from Mr Theonas to Mr Vrettakos, Mr Theonas orchestrated a four week extension of the date for settlement. At this time, Mr Vrettakos was overseas. Mr Theonas apparently negotiated the extension with Mrs Sinopoli on the condition that Mr Vrettakos paid $6,500 to the vendors before 23 May 2011. Mr Theonas said that he had explained to Mrs Sinopoli, “that you [Mr Vrettakos and Ms Selemidis] have finance from the ANZ pending”.
167In an email to Mr Sleigh dated 13 May 2011, Mr Vrettakos promised to pay the $6,500 to the vendors to obtain an extension on the settlement date of 30 days. The payment was not made and the vendors served a rescission notice dated 26 May 2011 on Mr Vrettakos and Ms Selemidis. They vacated the Beaumaris property in about mid May 2011. Later the property was resold.
168Ms Selemidis said that in about May 2011, she engaged Bayani Harvey Lawyers to recover the loan from Mr Theonas. On 1 June 2011, the solicitors sought a copy of the contract of sale and rescission notice from Principle Conveyancing Solicitors. The documents were supplied the following day.
169Handwritten note dated 11 June 2011: It appears, therefore, that on 11 June 2011, Ms Selemidis had solicitors acting for her and they were gathering material so they could properly advise her on the contract of sale of the Beaumaris property and the recovery of the loan from Mr Theonas. On 11 June 2011, Ms Selemidis signed a document handwritten by her husband addressed to Mrs Sinopoli. In the document, Ms Selemidis acknowledged that, “The loan agreement between myself and Malvern-Williams Rd with a personal guarantee from George Theonas is now finalised”.
170Ms Selemidis said that she signed the document under pressure from her husband. Mr Vrettakos told her that Mr Theonas wanted the document. Mr Vrettakos was going overseas the following day. He said that unless Ms Selemidis signed the document, Mr Theonas would not give Mr Vrettakos any money and he would not be able to go overseas. Ms Selemidis agreed to sign the document and on 15 June 2011, the sum of $6,500 was transferred to Ms Selemidis’ bank account by Mr Theonas.
171Mr Theonas said that he was concerned at the time that Ms Selemidis was threatening to place a caveat over the Beaumaris property. He therefore asked Mr Vrettakos to get him a letter that the loan agreement had been finalised. Mr Vrettakos obtained the document and Mr Theonas sent it to Mrs Sinopoli. Mr Theonas denied that he had threatened Ms Selemidis. He denied that he offered money, but said that the $6,500 was “loaned over”.
172I consider it likely that the document was only signed as a result of the pressure applied by Mr Vrettakos following a request for such a document by Mr Theonas. In my view, the letter does not affect what would otherwise be Ms Selemidis’ entitlement to recover under the loan agreement from Mr Theonas.
173On 5 July 2011, Mr Vrettakos swore the statutory declaration. A few days before, Mr Vrettakos and Mr Theonas had met in conference with Mr Velos to give him instructions. It is probably that, at the time Ms Selemidis signed the letter to Mrs Sinopoli on 11 June 2011, Mr Vrettakos was paying little regard to his wife’s interests.
174The contract of sale for the Beaumaris property was rescinded by notice dated
26 May 2011. In June 2011 the CCI loan taken out by Ms Selemidis was also in arrears.175Mr Velos said that although his retainer for Ms Selemidis was “finished”, he was asked “to call the lender to hold off legal proceedings”, in order to “stop the foreclosure”. Mr Velos said that he had been informed that Ms Selemidis was attempting to refinance the loan over the Croydon property. The bill of costs of CCI’s solicitors notes that during the months up to, and past mid-July 2011, Ms Velos was occasionally communicating by telephone and email with CCI’s solicitors.
176It is not clear on the evidence the extent to which Mr Theonas was involved in the refinancing. Ultimately the refinance was obtained. It was during the months of May through to July 2011 that Ms Selemidis sought to deal with the problems arising from the rescission of the contract of sale of the Beaumaris property and the threat of foreclosure in relation to the loan secured by the Croydon property.
177On June 2011, Ms Selemidis signed the letter to Mrs Sinopoli prepared by Mr Vrettakos at the request of Mr Theonas. In late June 2011, Mr Vrettakos, Mr Theonas and Mr Velos were meeting to further bolster the case against Ms Selemidis’ claim for repayment of the loan to Mr Theonas by the preparation of a statutory declaration. At the same time, Mr Velos, Mr Vrettakos and probably Mr Theonas were apparently working to protect Ms Selemidis’ Croydon property by a refinancing of the CCI loan through the ANZ bank.
178Although Ms Selemidis had independent solicitors acting for her at that time, the solicitors’ experience in litigation, and their effectiveness, was limited. Ms Selemidis wrote a letter to her solicitor on 22 June, which commenced, “My health position is getting worse and I think it may be best to accept that my money is gone and to simply live day to day. I can’t trust either of them [Mr Vrettakos and Mr Theonas] and yet I am dependent on both of them”.
179Ms Selemidis did not commence this proceeding until the writ was issued on 25 June 2014. I consider that I should decide the case in accordance with the following matters –
a.generally, Ms Selemidis should be bound by the contractual documents she signed;
b.otherwise, where the determination of issues depend upon the acceptance of contested oral evidence, the reliability and credit of the witnesses makes it impossible to reach any conclusions as to what was more likely than not to have happened;
c.accordingly, there is no sound basis upon which to impugn the signed contract of sale or the Amendment to the loan agreement;
180I have concluded, however, that even if Mr Theonas can rely upon the Amendment to agreement as a document binding upon him and Ms Selemidis, that his failure to meet the requirement he accepted of paying the $200,000 balance of the Beaumaris property deposit as the basis to amend the loan agreement meant that there was not a “full and final settlement” of the loan agreement.
181Ms Selemidis should recover from Mr Theonas in respect of the amount owing under the loan agreement. I will, however, reduce that sum by the increased payments Mr Theonas needed to pay Mr and Mrs Sinopoli to cover the shortfall caused by the loss of rental income.
182That sum represents the benefit Ms Selemidis and Mr Vrettakos obtained from being able to occupy the Beaumaris property rent free for 6 months from November 2010 to May 2011. I propose to give judgment for Ms Selemidis for the loan amount of $230,000, less the payments of $44,500 and the loss of rental from the tenants of the Beaumaris property during the occupation by Ms Selemidis and Mr Vrettakos of $19,189.32, leaving a balance of $166,310.68.
Orders
183There will be judgment for the plaintiff against the defendant that the defendant pay to the plaintiff the sum of $166,310.68.
184I will hear further from the parties in relation to questions of interest and costs.
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Certificate
I certify that these 40 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 5 August 2015.
Dated: 5 August 2015
Olivia Bramwell
Associate to His Honour Judge Anderson
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