Socratous v Galanopoulos - [2016] NSWSC 1209

Supreme Court

New South Wales

Medium Neutral Citation: Socratous v Galanopoulos [2016] NSWSC 1209
Hearing dates: 23 August 2016
Decision date: 23 August 2016
Jurisdiction: Equity
Before: White J
Decision:
1. Judgment for the first and second plaintiffs Mr Socratous and Ms Kadi against the first defendant Mr Galanopoulos in the sum of $691,532.12 plus interest to be calculated pursuant to s 100 of the Civil Procedure Act from 26 July 2016 to today's date on that sum.
2. Judgment for the first plaintiff against the first defendant in the sum of $182,913 plus interest pursuant to s 100 of the Civil Procedure Act calculated from 28 July 2015 to date.
3. Order that the first defendant pay the first plaintiff's costs.

Catchwords: PRACTICE AND PROCEDURE — Application for summary judgment — Plaintiffs and defendants provided a guarantee and indemnity in respect of a loan — Plaintiffs discharged loan — Plaintiffs seek contribution from co-guarantors — First defendant failed to file a defence to the plaintiffs further amended statement of claim — First defendant did not provide any evidence in response to plaintiff’s notice of motion for summary judgment — First defendant unable to make any submission suggesting any defence to plaintiff’s further amended statement of claim— Plaintiffs entitled to summary judgment against first defendant.
Category: Procedural and other rulings
Parties: Neil Socratous (1st Plaintiff)
Rita Kadi (2nd Plaintiff)
Dimitri Galanopoulos (1st Defendant)
Maria Galanopoulos (2nd Defendant)
Representation:
Counsel:
A McQuillen (1st Plaintiff)
In person (2nd Plaintiff)
In person (1st Defendant)
No appearance (2nd Defendant)
Solicitors:
Sullivan Fernan Lawyers (1st Plaintiff)

File Number(s): 2015/220347

Judgment

HIS HONOUR: I am dealing with an amended notice of motion filed by the first plaintiff, Mr Neoclis (Neil) Socratous, pursuant to leave I gave on 12 August 2016, for summary judgment against the first defendant, Mr Dimitri Galanopoulos in the sum of $874,445.12 plus interest and costs.
These proceedings were commenced in the District Court by statement of claim filed on 28 July 2015. At that time Mr Socratous sought damages, interest and costs in respect of what were claimed to be breaches of agreements made between him and Mr Galanopoulos. He pleaded that at all material times he and Mr Galanopoulos were the directors and shareholders of a company called Baronia Holdings Pty Ltd (“Baronia”) and another company called D Galanopoulos & Associates Pty Ltd that traded as DNM Partners. He pleaded that that company conducted an accounting practice in which he and Mr Galanopoulos were partners, but that that business ceased on or about 1 July 2012.
He pleaded that before that date D Galanopoulos & Associates entered into a loan agreement with the National Australia Bank for the bank to provide it with a line of credit in the amount of $545,000 as an interest only loan. He pleaded that on or about 9 December 2013 that loan was refinanced by the National Australia Bank into two loans, one for each of the plaintiff and the defendant, the loan to the plaintiff being in the sum of $142,000 and the loan to the defendant being in the sum of $403,000, these being loans requiring payment of principal and interest.
He pleaded that prior to 1 July 2012 Baronia entered into a loan agreement with the National Australia Bank for the sum of $650,000, this being an interest only loan, and before 1 July 2012 that Baronia entered into another loan with the National Australia Bank for $120,000, this being an interest only loan.
He pleaded that he and his wife Rita Kadi provided guarantees of these loans and as security for them gave a mortgage to the National Australia Bank over the family home in Awaba Street, Mosman. He pleaded amongst other things that from 1 July 2012 to about 9 December 2013 Mr Galanopoulos refused to pay or did not pay any payments under the first loan agreement to the National Australia Bank at all and from about 9 December 2013 has refused to pay and not paid any payments under what was called the separate loan agreement being the division of the first loan into the two loans of $142,000 and $430,000.
All of these allegations were admitted in Mr Galanopoulos' defence. Mr Galanopoulos said that Mr Socratous was to cover the repayments until the business was sold and then matters were to be sorted out between them. That is the only positive averment made in the defence filed for Mr Galanopoulos that otherwise contains denials and non-admissions.
Mr Socratous made an affidavit on 16 November 2015 and a further affidavit on 25 November 2015. In his affidavit of 16 November 2015 he annexed email correspondence that included Mr Galanopoulos' agreement to the first $545,000 loan being refinanced as to $403,000 to himself and $142,000 to Mr Socratous. Mr Socratous annexed guarantees that were given in respect of the indebtedness of Baronia to the bank and in respect of the indebtedness of D Galanopoulos & Associates to the bank.
Mr Galanopoulos gave a guarantee in respect of the indebtedness of Baronia along with Mr Socratous and Ms Kadi. The guarantees of the Baronia indebtedness had a limit of $800,000 plus interest including default and compound interest, bank fees, costs, charges, expenses and taxes and what were called "economic costs". A guarantee was given by Mr Socratous, Ms Kadi, Mr Galanopoulos and, purportedly at least, by Mrs Maria Galanopoulos in respect of the liability of D Galanopoulos & Associates to the bank.
Mr Socratous also deposed in his affidavit of 25 November 2015 to having had an agreement with Mr Galanopoulos in which Mr Galanopoulos agreed to make 50 per cent of the monthly repayments on the loans to the bank. He deposed that Mr Galanopoulos agreed that once the business was split he would pay his 50 per cent share of the monthly repayments and there would have to be an adjustment in respect of the payments that Mr Socratous had made. He deposed to a later conversation in 2013 in which Mr Galanopoulos acknowledged responsibility for $403,000 of the $545,000 DGA loan. As I have said, in the defence filed on 4 September 2015 Mr Galanopoulos admitted responsibility for that amount of loan.
The proceedings were transferred to this Court. An amended statement of claim was filed on 22 January 2016 and a further amended statement of claim was filed on 19 April 2016. Orders were made for the defendants to file and serve defences to those pleadings. A defence has been filed by Mrs Maria Galanopoulos. Summary judgment is not sought against her. No defence to the later pleadings has been filed by Mr Galanopoulos. Nor has Mr Galanopoulos served any evidence in response to the plaintiff's notice of motion.
The notice of motion was originally filed on 28 June 2016 and came before me on 12 August 2016. As originally framed, the notice of motion sought judgment against Mr Galanopoulos in the sum of $195,276.02 and a declaration that in the events which had happened Mr Galanopoulos was liable to indemnify Mr Socratous for a sum equal to a quarter of the amount paid, or to be paid, by Mr Socratous to the National Australia Bank on the sum of approximately $560,000 lent to D Galanopoulos & Associates Pty Ltd and a declaration that in the events which had happened Mr Socratous be indemnified by Mr Galanopoulos for a sum equal to one third of the amount paid, or to be paid, by the plaintiff to the National Australia Bank by way of principal and interest on what was said to be an amount of $800,000 lent to Baronia, the subject of a guarantee and indemnity given to the bank by Mr Socratous, Mr Galanopoulos and Ms Kadi.
The indebtedness of D Galanopoulos & Associates and of Baronia to the bank was secured by a registered mortgage given by Mr Socratous and Ms Kadi over their house in Awaba Street, Mosman. Shortly before the notice of motion was due to be heard, a sale of the Mosman property was completed and the bank was paid out. This led to the plaintiff’s ultimately not pursuing the relief as framed in the notice of motion filed on 28 June 2016 at the hearing on 12 August. I should say that at the hearing on 12 August there was no appearance by Mr Galanopoulos and I refused an application he made by email to my associate for an adjournment. Nonetheless, having regard to the way matters proceeded at the hearing, it became clear that the plaintiff needed to amend his notice of motion and I gave leave for that to be done and stood over the amended notice of motion for further hearing before me today. Today Mr Galanopoulos has appeared and made submissions.
The amount for which summary judgment is sought against Mr Galanopoulos is, as I have indicated, $874,445.12 plus interest. This amount is made up essentially of three components. The first is an amount of $182,913, which in turn is made up of three components. The first is a sum of $35,601 claimed as an amount owed by Mr Galanopoulos to Mr Socratous for payments made by Mr Socratous to the National Australia Bank that ought to have been made by Mr Galanopoulos pursuant to their agreement made in about July 2012 that they would each pay half of the interest on the first loan of $545,000 to the bank when interest became due and payable. Mr Socratous has given evidence of that agreement.
The second amount claimed is for $65,202 for payments made by Mr Socratous which Mr Galanopoulos was liable to make to the National Australia Bank for the period between about 9 December 2013 to 29 June 2015. Pursuant to what the further amended statement of claim rather confusingly calls the second first loan agreement, it was agreed (and this is admitted on the pleadings) that Mr Socratous would bear $403,000 of the loan amount of $545,000 owed by D Galanopoulos & Associates to the bank. This claim is for the moneys paid by Mr Socratous in respect of Mr Galanopoulos' liability under their agreement to be responsible for that part of the loan.
The third component of the claim totalling $182,913 is for the amount said to be owed by Mr Galanopoulos to Mr Socratous for payments made by him which should have been made by Mr Galanopoulos to the bank pursuant to an agreement that Mr Socratous deposes was made in about June 2012 that those parties would each pay half of the interest on the loans of Baronia from the bank.
There is evidence in support of each of those claims. Mr Galanopoulos has not served any evidence in rebuttal. He has not filed any defence to the amended statement of claim or the further amended statement of claim and nothing raised by him in his submissions today suggests any defence to any part of it. Accordingly, the plaintiff will be entitled to judgment for the amount of $182,913 as sought. That judgment is one to which the first plaintiff alone is entitled.
The other two parts of the claim relate to amounts received by the National Australia Bank on the completion of the sale of the Mosman property that was owned by Mr Socratous and Ms Kadi jointly.
Judgment for $298,300.53 is sought pursuant to the guarantee that Mr Galanopoulos provided to the bank as a co-guarantor with Mr Socratous and Ms Kadi. It is clear that they are entitled to contribution from him. On completion of the sale the bank received $894,901.60 representing the outstanding principal on the two loans referred to in the further amended statement of claim plus interest including penalty interest and fees. The information provided by the bank refers to a pay-out figure as at 26 July 2016 of $657,159.95 in respect of the first loan and $121,362.60 in respect of the second. There was a further debt of $116,379.05 arising from the new numbered account that was opened by the bank on default under the earlier loans that provided for interest, penalty interest and fees. These amounts fall within the limit of the guarantees. There is no defence to the claim for contribution. But that claim is one to which it appeared to me Mr Socratous and Ms Kadi were entitled to jointly, even if Mr Socratous might have been entitled to a several claim for contribution.
The third component of the claim for summary judgment was for a sum of $393,231.59. This represented Mr Galanopoulos' portion of the debt owed by D Galanopoulos & Associates to the bank for which he had agreed to be responsible, being his proportion of 403/545 part of the loan. The whole of the loan was discharged from the proceeds arising from the settlement of the Mosman property. Again there is no defence to that claim but because the moneys that were used to discharge the debt came from the sale of the property owned by both Mr Socratous and Ms Kadi, again it seemed and seems to me that both Mr Socratous and Ms Kadi were entitled to contribution in that amount from Mr Galanopoulos.
Ms Kadi had not been joined either as a co-plaintiff or as a defendant to the proceeding. I raised with counsel for the plaintiff whether or not part of the relief sought by Mr Socratous was relief to which Ms Kadi was jointly entitled, and whether she should be joined as a party, or whether I should make an order under r 6.20 to the effect that she need not be joined. UCPR r 6.20 provides that unless the Court otherwise orders, all persons jointly entitled to the same relief must be joined as parties in any claim for that relief that is made by any one or more of them.
Ms Kadi has been in Court on the hearing of the application, and as I recall it, she was also in Court when the matter was before me on the previous occasion. She has indicated her consent to being joined and I have made an order for her to be joined as a co-plaintiff.
I am satisfied that Mr Socratous and Ms Kadi are entitled to summary judgment in the amounts sought save that judgment for the sum of $182,913 is a judgment to which Mr Socratous alone is entitled to.
Summary judgment is appropriate having regard to the admissions made by Mr Galanopoulos in his defence, his failure to file any defence to the amended statement of claim or the further amended statement of claim, the absence of any evidence from him suggesting that there is a triable issue in respect of any part of the claim, and his submissions in Court today.
Interest on the sums of $298,300.53 and $393,231.59 is payable from 26 July 2016, that is, after the sale of the Mosman property and payment to the bank. Mr Socratous claims interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) from only 28 July 2015, being the date the proceedings were commenced. For whatever reason he has not sought interest prior to then, and I will make an order for interest accordingly.
For these reasons:

1. I give judgment for the first and second plaintiffs (Mr Socratous and Ms Kadi) against the first defendant (Mr Galanopoulos) in the sum of $691,532.12 plus interest on that sum to be calculated pursuant to s 100 of the Civil Procedure Act 2005 (NSW) from 26 July 2016 to today's date.

2. I give further judgment for the first plaintiff against the first defendant in the sum of $182,913 plus interest pursuant to s 100 of the Civil Procedure Act calculated from 28 July 2015 to date.

I will hear the parties on costs.

[Parties address on costs.]

3. I order that the first defendant pay the first plaintiff's costs.

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Decision last updated: 30 August 2016

Medium Neutral Citation:	Socratous v Galanopoulos [2016] NSWSC 1209
Hearing dates:	23 August 2016
Decision date:	23 August 2016
Jurisdiction:	Equity
Before:	White J
Decision:	1. Judgment for the first and second plaintiffs Mr Socratous and Ms Kadi against the first defendant Mr Galanopoulos in the sum of $691,532.12 plus interest to be calculated pursuant to s 100 of the Civil Procedure Act from 26 July 2016 to today's date on that sum. 2. Judgment for the first plaintiff against the first defendant in the sum of $182,913 plus interest pursuant to s 100 of the Civil Procedure Act calculated from 28 July 2015 to date. 3. Order that the first defendant pay the first plaintiff's costs.
Catchwords:	PRACTICE AND PROCEDURE — Application for summary judgment — Plaintiffs and defendants provided a guarantee and indemnity in respect of a loan — Plaintiffs discharged loan — Plaintiffs seek contribution from co-guarantors — First defendant failed to file a defence to the plaintiffs further amended statement of claim — First defendant did not provide any evidence in response to plaintiff’s notice of motion for summary judgment — First defendant unable to make any submission suggesting any defence to plaintiff’s further amended statement of claim— Plaintiffs entitled to summary judgment against first defendant.
Category:	Procedural and other rulings
Parties:	Neil Socratous (1st Plaintiff) Rita Kadi (2nd Plaintiff) Dimitri Galanopoulos (1st Defendant) Maria Galanopoulos (2nd Defendant)
Representation:	Counsel: A McQuillen (1st Plaintiff) In person (2nd Plaintiff) In person (1st Defendant) No appearance (2nd Defendant) Solicitors: Sullivan Fernan Lawyers (1st Plaintiff)
File Number(s):	2015/220347